U.S. President Barack Obama listens during the G20 working dinner at the National Museum of Korea in Seoul on Nov. 11, 2010.YONHAP/AFP / Getty Images
This week's release of the ideas of President Barack Obama's hand-picked advisers, Erskine Bowles and Alan Simpson, on combating the U.S. debt, kicked off a debate that will rage south of the border for months, possibly for years. It will have subtle but important reverberations for politics in Canada, too.
By now, there are few Americans left who are sanguine about their country's mountain of debt, or the pace at which it is growing. The bipartisan report tabled Wednesday startled observers who may have been expecting a more tentative set of ideas: the authors advocate extensive cuts in politically sensitive programs including Social Security. The report also waded into some of the choppiest water of American politics, calling for increased tax revenue as well.
Here in Canada, Ottawa's record-setting deficit has been something of a non-event in terms of public opinion. One reason for that is how much Canadians have been hearing about how bad other countries have it. Canadians are convinced that our economic woes are mostly a hangover that resulted from an economic binge in the United States, and that we are far from alone in feeling the effects.
The idea that governments should pump money into the economy was largely uncontroversial because everyone in the world seemed to be doing it. And now, the size of Canada's deficit is being evaluated by voters in the same context. Compared to the dramatic choices facing Greece, Ireland, Portugal and Spain, Canadians may feel they have little reason to stay awake at night. Massive spending cuts in Britain and divisive social policy adjustments in France offer even more reasons for Canadians to temper their complaints about our circumstances.
And now, America, long seen by Canadians as the foundation stone of economic growth in our country, is looking to correct a $4-trillion imbalance in the next nine years.
Against this backdrop, Finance Minister Jim Flaherty's job in the run-up to the next budget will be infinitely easier than a $50-billion deficit would suggest. If he makes radical cuts, they will look less radical than those implemented elsewhere. If he doesn't, and takes a few more years to get our fiscal balance back, voters might conclude that the downside is mild compared to that faced by our global competitors.
Ottawa's spending habits may become an issue in the next election. But if so, it seems far more likely that the heart of the debate will be about wasteful spending rather than about the size of our deficit and debt. This week's revelations of the tough choices facing America are unquestionably a helping wind for Canada's Conservative government.