WhatFinger


Ottawa and Washington

A Tale of Two Cities



It was the best of weeks, and it was the worst of weeks for Ottawa and Washington. Last Tuesday, (February 11) Canada’s Finance Minister introduced the federal government’s budget to the House of Commons. On the following day, both branches of the United States Congress passed a bill to increase their budget’s “debt ceiling” in order to ensure that America’s Treasury Department could continue spending beyond its means. The two countries, therefore, have been and now will continue to be, headed in diametrically opposite fiscal policy directions.
Both countries are digging out from the Great Recession which began in 2008. Both ran deficits initially in order to ease the pain of slowing economies and the subsequent unemployment that gripped each country’s citizens. But only Canada correctly gauged what should be the width and breadth of each’s reaction to the problem. The budgetary actions by both governments this week spotlights the success of Canada’s conservative approach on the one hand, over the pedal-to-the-metal tax-and-spend stimulation approach of progressive/liberal Democrats in Washington, on the other. The U.S. has ten times the population of Canada. Comparing raw budgetary data for each country, of course therefore, serves no purpose. Anyway, as Benjamin Disraeli, the mid-nineteenth century P.M. of England once quipped, “There are three kinds of lies: lies, damned lies, and statistics.” Instead, suffice it here to compare the two economic philosophies as advocated by their proponents.

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For the Americans, the bill sent by Congress this week to be signed by the president called for raising the “debt ceiling”. The debt ceiling is simply the maximum amount of monies the United States can borrow. The upshot of the bill’s passing is similar to you and me asking Visa to unendingly increase our credit limit by thousands without us promising to spend less, while likewise paying nothing towards our statement’s balance. Good luck with that one eh? Tea Party members in the House and Senate voted en masse against the bill. Senate spokesperson for the Tea Party, Ted Cruz, condemned the vote. He said, "Today's vote is yet another example that establishment politicians from both parties are simply not listening to the American people. Outside the beltways, Americans of all political stripes understand that we cannot keep spending money we don't have." The Washington Post reported that, behind closed doors, the jubilant leader of the House Democrats, Nancy Pelosi, “instructed (Democratic) rank-and-file members, don’t gloat, take it in stride and hang together.” In effect, the bill the president will sign into law permits this generation of selfish and/or low information Americans to kick the proverbial can of 17 trillion dollars worth of debt and perpetual deficits down the proverbial road to their children and grandchildren. One might ask, what’s to “gloat” about there, Ms. Pelosi? America will just continue to do three things:
  • Raise taxes on the productive sectors of the country,
  • Print money to satisfy the stock markets and manipulate the currency, and
  • Borrow hundreds of billions of dollars from China and others abroad until the bubble bursts.
Americans’ descendants will someday be asking, “Gee daddy, what did you do in the fiscal war back then?” To the contrary, Canada’s response to the fiscal crisis of 2008 has been so typically Canadian, i.e. patient, prudent, conservative, and boring. Taxes were not increased in this budget, and for a third straight year, direct program spending was reduced. The majority Conservative Government could, in fact have probably balanced the budget this year but will wait till 2015’s federal election budget to do so. By 2018-2019 indeed, the budget will boast a surplus. Employment continues to improve and Canada’s economy remains the envy of competing economies around the world. So, given the near to longer future, the final lines of this tale of two cities, Ottawa and Washington, could well read, “It is a far far better thing we have done here than our irresponsible cousins to the south are doing. It is a far far better future we leave to you, our children, than our generations had.”


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Doug Jeffrey -- Bio and Archives

Doug is a retired teacher, living on the banks of the mighty Sydenham River beyond the eastern outskirts of Wallaceburg, Ontario.  Before entering the teaching profession, Doug spent fifteen years back and forth between a family business and the Universities of Windsor and Western Ontario.

Doug and his wife enjoy the company of our two children, four grandchildren, and a very spoiled indoor/outdoor brown tabby named Aslan.  Doug also dabble, as an assistant, in the genealogical research and writing pursuits of wife Margaret.


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