Friday 1 May 2009

This graph has warped my fragile little mind

The graph above is from Bill Watson's excellent roundup of fiscal trends in Canada and the US. For my entire life, Canada's ratio of government spending to GDP has been higher than that in the US. For all those Democrats who threatened to move to Canada during the Bush years, Obama's saving them the trouble: the US is becoming Canada, at least in terms of size of government.
What will happen to those expenditure lines over the next few years? President Obama is pushing for big increases in health care and education and he’s piling on a lot more government debt — which means higher future interest payments—than we are.

It’s not inconceivable that in five years’ time, we’ll be spending less through our public sector than the Americans are through theirs. And if both countries get back to balanced budgets, that means the tax drag will be less here than it is there.

Getting your mind around the possibility that we will be the lower-tax jurisdiction in North America takes some doing, but in fact that was the case during the 1950s, some of the best economic years in our history.
Perhaps the US should just give up and become Canada's 11th province. If Canada would take them.

Update: Veronique de Rugy urges America not to become France in the video below. Salut Vero!

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