(December 13) – “From today’s straw polls and televised beauty parades to the first budget that the next U.S. president will get out of Congress is a distance of many leagues, but travelling toward it are a bunch of candidates with one idea: Anything America wants is affordable,” writes Peter Cook in today’s Globe and Mail.
“For the Republicans, George W. Bush fancies a $483-million (U.S.) tax cut. He would reduce income taxes, end estate taxes, double the child tax credit and enact numerous tax breaks. “For me, tax cutting is not some abstract cause,” he says. The latter remark is a swipe at flat-tax theorist Steve Forbes whose plans, unabstractedly, would cost more than Mr. Bush’s. Another candidate, John McCain, lines up with Republicans who, last summer, produced a budget with a 10-year $792-billion tax cut that President Bill Clinton vetoed.
“Among Democrats, the preference is for the money to go into new spending initiatives. This leaves Vice-President Al Gore and former senator Bill Bradley challenging each other in the single issue of whose multibillion-dollar health care plan offers better value.
All of which suggests that the present fiscal moment — when the U.S. federal budget is in surplus by $123-billion — should be savoured. It is unlikely to last.
“In Canada, with more justification, the call is also out to lower a punishing rate of taxation. However, Liberals are in charge and they will not make any decision before its time, and will then chop up that decision into two or three parts in the belief that this will please two or three times the number of voters.
“So Canada will dispense with the $84-billion (Canadian) surplus that Finance Minister Paul Martin sees coming over the next five years. Tax cuts, spending increases and debt reduction will all get a share. Liberals being Liberals, however, spending will get as much the other two put together.
“In Japan, there is absolutely no end to government spending. Indeed it is the only thing that makes the economy move and so it is being kept up or, rather, topped up regularly despite a formidable run-up in the national debt. In Europe, the leaders of the 15-nation European Union met in Helsinki this weekend to pledge that they will be the financial protectors of 12, mostly poor, countries in the 10 years or so that it will take to raise their living standards and bring them into the EU club. The cost of this exercise went unstated. To state it would have wrecked the party entirely. Suffice it to say that, in just one area, cleaning up Eastern Europe’s environment, a sum of $120-billion (U.S.) is required.
“Meanwhile, it is hard to find a European government that wants to cut taxes. And it is hard to find one that is doing anything to improve its finances. Instead, they are enjoying the end of a period of supposed austerity ahead of the launch of the euro that left them still with national debts still averaging more than 70 per cent of gross domestic product.
“Travel the developed world and two things appear to be happening. First, the economic outlook is improving with the only worries being U.S. over-bullishness and Japanese over-bearishness. Second, as the millennium turns, old restraints about government spending that have been with us since the early 1980s are being shrugged off. The feeling is: risks can be taken. Surpluses are there to be spent.