How to Balance the Federal Budget

Canada and many other sovereign governments all around the world currently face a huge dilemma. That is how to best go about balancing the federal government budget, while doing minimal damage to the nascent economic recovery now under way? In Canada, this is a question we dealt with very successfully in the mid 1990s. And now thanks to overspending and overzealous tax cuts by our allegedly conservative government, we will soon need to face again.

Source:Public Accounts of Canada Archives and Parliament of Canada

In the early 1990s, despite many years of growing economic output and much talk of fiscal restraint, Canada under Brian Mulroney’s Tory government was still running federal deficits in the area of 40 billion dollars a year at the end of its time in office. The Liberal Party were elected in late 1993 and within 3 years, had balanced the books. Over the next 14 years or so, the accumulated national debt was paid down by approximately one third from approximately 600 billion to approximately 400 billion dollars.