David Gratzer's Misleading Article on Canada's Election
By David Henderson
Gratzer leaves out the tremendous accomplishments of the Liberal Party between 1995 and 2006.
Since the early 1960s, when the Liberals won the first of 10 victories in 13 elections, Canadian governance largely focused on welfare statism. Between 1963 and 1993, government spending soared to over 50% of GDP from 29%. In contrast, American government spending in the same years grew only about 6%, to 34%.
The Liberals championed public pensions and free health care, favored tariffs, and implemented massive wealth transfers to poorer regions. The party cobbled together a coalition of students and professors, big business and big labor, old money and new immigrants–a coalition held together by subsidies, grants and government programs, with high taxes and large deficits to fund it all.
The Liberals still won back-to-back-to-back majorities (1993, 1997 and 2000), but the coalition began to fall apart.
The highlighted quote above is from David Gratzer, “Canada Makes a Right Turn,” in today’s Wall Street Journal. Everything in the above quote is true. It’s also highly misleading. Why? Because it leaves out the tremendous accomplishment of Liberal Prime Minister Jean Chretien and his Minister of Finance Paul Martin in cutting spending, turning deficits into surpluses, and cutting the ratio of debt to GDP by over half. I documented all of this in my Mercatus study, “Canada’s Budget Triumph.”
David makes it sound as if the Liberal Party continued with its Trudeau-initiated big government schemes, but the Liberal Party, beginning in 1995, changed its ways dramatically. Here’s what I wrote in summarizing the effects of their budget cuts:
The result of years of cuts in government spending was that, as a percent of GDP, federal spending on programs fell from a high of 17.5 percent in 1992-93 to 11.3 percent in 2000-01.
Note that program spending does not include interest on the debt, which fell also. Check my study for more details.
It’s true that the coalition broke down, but that has more to do with the Sponsorship scandal than anything else.