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Deficit-Cutting Then & Now

Deficit-Cutting Then & Now

By Scott Proudfoot, Principal

In the lead-up to the Harper Government’s March 4th Budget, there is much discussion and debate about both the need to cut the deficit and how it can be done. For some perspective, it is always useful to visit the past (in this case the recent past) to examine how other federal governments confronted a similar challenge.

Canadian Federal Governments ran deficits on and off in the sixties and then chalked up 27 in a row between 1970-71 and 1996-1997. The Government then ran 11 successive surpluses until the recent recession pushed public finances off the rails again.

The Trudeau and Mulroney Governments were unsuccessful in eliminating the deficit; the Chretien Government succeeded.  Why did those Governments fail? How did the Chretien Government achieve what the others couldn’t? Can we apply that experience to our current problem?

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