August 2, 2011 – In yesterday's Wall Street Journal, MLI's Director of Research & Managing Editor Jason Clemens discusses why Canada is beating America and the opportunity Canada has to vault forward saying, "The Conservatives led by Prime Minister Stephen Harper have a chance to build on the reforms begun under previous Liberal governments that Americans can only look at with envy."

Clemens points to a combination of spending cuts in the 1990s and spending restraint during the 2000s that allowed for balanced budgets and the retiring of debt.

Clemens writes in the WSJ:

Canada's government, for example, has grown smaller over the last 15 years. Total government spending as a share of the economy peaked at a little over 53% in 1993. Through a combination of spending cuts in the 1990s and spending restraint during the 2000s, it declined to a little under 40% of GDP by 2008. (It's currently about 44% due to the recession.)

Reductions in government spending allowed for balanced budgets and the retiring of debt. Federal debt as a share of the Canadian economy was almost halved from nearly 80% to a little over 40% over the same period.

He then discusses two major challenges that Canada's Conservative government now faces: health reform and taxes.

On health reforms, Clemens writes, "Conservatives have an opportunity to give the provincial governments more leeway in delivering and financing health care. Allowing the provinces to become laboratories for different methods of health-care delivery and financing while protecting universal access holds the greatest chance for improving health care and controlling costs."

The other major challenge is uncompetitive tax rates. Clemens says, "Canada's personal income tax rates are relatively high and kick in at comparatively low levels of income." An excerpt below:

The Conservatives have committed to tax relief once the budget is balanced, which is expected toward the end of their current term. To implement meaningful income tax cuts, the Conservative government will also need to be more proactive with spending reductions. As demonstrated in the 1990s by their Liberal Party predecessors, spending reductions now will result in a balanced budget sooner and an opportunity for large-scale tax relief.

Read the full article by Jason Clemens here: "Why Canada Is Beating America" in The Wall Street Journal, August 1, 2011 (subscription required).

Since the release of this article, it has received wide media coverage. The National Post's Lorne Gunter commented on the article, "Canada shows U.S. the way on government spending, taxes". Clemens also has appeared on a number of radio shows across Canada and the U.S. Stay tuned for more information on these appearances.

 

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