Growing up, whenever anyone handed me change, I always checked it carefully for Canadian coins. They sometimes got stuck in vending machines and weren’t worth quite as much as U.S. coinage. The disparity in value got progressively worse for the Canadians as their country became increasingly, well, progressive.
But then something happened in 2011. Their money is now worth morethan ours, and it’s continuing to pull ahead. Although many observers saw it coming, they never imagined the speed at which the economic improvement would take place. Canada’s rate of recoveryexceeded all estimates. How did it do it? Apparently, it started listening to its southern neighbor’s Republican politicians.
Canadian leaders started out by cutting business taxes to the bone. Businesses are the nation’s job engines, and jobs, in turn, provide revenue for the government to operate. It makes no sense to aggressively tax corporations, as these costs are simply passed on to the consumer. The United States has forgotten this maxim, and as a result, it has one of the highest corporate tax rates in the world.
Next, the Canadians cut spending and began paying off their national debt. Canada’s debt was a massive 68 percent of its gross domestic product in fiscal year 1995-96. Today, it stands at about 29 percent. Compare this to the United States. Our debt to GDP rate has now surpassed a very scary 100 percent, and it continues to rise. Congress’ spending addiction, together with its inability to pass a budget and the Obama administration’s refusal to immerse itself in the budgetary process, has combined to place us in a fiscally dangerous position. We’re like that car we’ve all seen in the movies, balanced precariously on the edge of a precipice. We’re all praying that the tow truck arrives before a bird lands on the hood, sending us over the edge to an unintended Thelma and Louise finish.
Despite the measures Canada took, it still suffered the same recession as did the United States in November 2008. However, instead of artificially stimulating the economy in grand Keynesian fashion through massive government spending, Canada chose to let the recession “run its course” and allow the markets to self-correct. As a result, Canada’s economy is recovering briskly, whereas ours is still in the doldrums after spending nearly $1 trillion in borrowed stimulus funds.
Canada still hasn’t stopped looking ahead. Most recently, it recognized the costly folly of “green” government-run programs. Years ago, Canada was a signatory nation to the United Nations-sanctioned Kyoto Protocol, an international environmental treaty designed to create the “stabilization” of greenhouse gas emissions. Think of it as cap-and-trade on a global scale. Recently, Canada announced it was withdrawing from the treaty. George W. Bush, of course, kept America out of it, but everything about it — massive spending, government intrusion, centralized planning — is right up Barack Obama’s alley.
The question for the United States now is, are we going to continue making the same blunders time after time, or will we finally look north and gain some good Canadian common sense? Given the fact that we’ve already refused Canada’s help in the form of the Keystone XL pipeline, my hopes aren’t running very high at the moment.
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