In 1992 the economy was tanking in Canada. The Government was taking 53% of the Canadian economy, up from 23% in 1960. Government debt was 70% of GDP and government debt took 35 cents of every dollar.
The Canadian government correctly idenified the problem as too much government spending. The issue had nothing to do with taxation and they took decisive action. Unemployment benefits were reduced by 40%. Federal employment was reduced by 14% and Canada’s railway and air traffic control system was privatized. What happened next was startling. The economy running at an $36.6 deficit in 1992 turned into a $3 billion surplus overnight.
Canada’s liberal government in 1992, run by then prime minister Jean Chretien, listened to the Canadian people who wanted government reform and took action. Today Canada has faster economic growth than the U.S., a lower jobless rate and a stronger dollar as a result.
Today the liberal leadership in Washington stubbornly refuses to acknowledge this country has a spending problem and as a result is unwilling to show decisive leadership. Afraid of loosing their party base by addressing bloated government health and entitlements programs, they look the other way, blaming others, past presidents, conservative parties and anyone who stands in the way of their grab for power.