August 22, 2011
Media Release - A Budget Triumph From Canada’s Recent Past
Winnipeg: The Frontier Centre for Public Policy today released Canada’s Budget Triumph, a paper that describes how the Canadian government achieved fiscal balance in the 1990s without major tax increases. The paper shows that Canada returned to fiscal balance by making significant cuts to government spending levels. The study’s author, David R. Henderson, is an associate professor of economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School in Monterey, California. Professor Henderson’s paper contains important policy lessons for governments around the world today, as many are struggling to eliminate large budget deficits without resorting to the introduction of major, economically harmful tax increases.
Key Findings From the Study Include:
“We often think of Canada as a more-socialist and a higher tax country than the United States. So one might think that the Canadian government eliminated deficits in the 1990s with major increases in taxes. But that’s not what happened,” says the paper’s author, David R. Henderson.“So how did Canada do it? The main policy actions that the Canadian government took to shrink the deficit were real cuts to government spending. These weren’t just reductions in the growth rate of spending, a favourite trick of some politicians. These were cuts in absolute spending on many programs in dollar terms.” Professor Henderson argues that the story of Canada’s budget triumph contains important policy lessons for governments around the world today, including in the United States, who currently face budget pressures comparable to those Canada felt during the 1990s. “What we know is that if the political will is there and if the political incentives are right, the budget situation in the United States can be turned around with no major increases in taxes.”
About the Author
David R. Henderson is an associate professor of economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School in Monterey, California. He is also a research fellow with the Hoover Institution at Stanford University. He was born and raised in Manitoba.
Download a copy of Canada’s Budget Triumph HERE.
For more information and to arrange an interview with the study's authors, media (only) should contact:
David R. Henderson
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."