Canada's economic dinghy is tied hard aside the SS USA. It's been a terrific ride, so far. We've had a healthy balance of trade surplus from that relationship. Our industries have been integrated fully with the American economy.
Sure there have been a few bumps but you can't hitch a ride on a ship this size and not get buffeted by the wake every now and then.
Canada has done so well out of trading with the United States that we can sometimes take the whole thing for granted. We don't give a lot of attention to just where the SS USA is heading. That's too bad because it may be heading straight for the rocks and it may well take us along with it.
It's been a long time coming. For years the United States, its governments and its people have been building enormous debts. Despite a few surplus years during the Clinton administration, the Bush regime has spent like madmen, funded a war and cut taxes - all at the very same time. It takes a lot of money to do that, borrowed money, most of it borrowed abroad where you don't even get to tax back some of the interest paid out on the debt.
For years it has seemed that America was so big, so powerful, so important to the world economy that it could actually defy gravity. It posted record government deficits, record balance of trade deficits, record accumulated government debt and record individual debt and it never seemed to stop. The day of reckoning, however, is just around the corner at least according to the guy who runs America's General Accounting Office, the nation's Comptroller General, David Walker.
Walker is free to speak out. He's got job security until 2013. Now he's taking his campaign to the streets because he knows politicians don't want to speak about the looming economic crisis and people aren't much interested in hearing about it either.
The iceberg heading America's way are what they call 'entitlement' programmes: medicair, medicaid and social security. The U.S., like most western countries, has an aging population but one in which lifespans have been increased significantly in recent years. That spells a big wave of seniors calling upon these entitlements in the near future and calling on them for many more years than had been expected.
Entitlements are the iceberg but the second half of the problem is the ship that's steaming toward it, SS USA. While it should have been preparing the country for the changes coming, the governments - federal, state and municipal - have been binge borrowing. The Republicans have actually funded their tax cuts for the rich with foreign borrowings. Think about that for a moment.
Remember when Bush chastised Americans for being "addicted to oil"? That's only one addiction. The country and its people have become seriously addicted to debt. Family debt levels have never been as high. Home equity ratios have never been as low. Savings, forget about it.
America's current national debt totals roughly $8.5 trillion. The problem is it is growing at close to $2-trillion a year. If the government keeps on going, stays the course, Walker and others warn the debt could reach an adjusted figure of $46-trillion or more, roughly the net worth of every American, incluing he super rich ones.
There is only one solution and it's painful: raise taxes and slash entitlements. The fiscal mess of the U.S. federal government means there are no other choices. The country has been deliberately weakened to the point that it can't turn away from the iceberg.
There is one more problem: getting politicians to tell their constituents that they need to accept more taxes and fewer benefits. Politicians don't have that kind of courage today. An accountant who listened to Walker's speech came up with a good idea: get Oprah to convince the American people to support fiscal responsibility.
Sure there have been a few bumps but you can't hitch a ride on a ship this size and not get buffeted by the wake every now and then.
Canada has done so well out of trading with the United States that we can sometimes take the whole thing for granted. We don't give a lot of attention to just where the SS USA is heading. That's too bad because it may be heading straight for the rocks and it may well take us along with it.
It's been a long time coming. For years the United States, its governments and its people have been building enormous debts. Despite a few surplus years during the Clinton administration, the Bush regime has spent like madmen, funded a war and cut taxes - all at the very same time. It takes a lot of money to do that, borrowed money, most of it borrowed abroad where you don't even get to tax back some of the interest paid out on the debt.
For years it has seemed that America was so big, so powerful, so important to the world economy that it could actually defy gravity. It posted record government deficits, record balance of trade deficits, record accumulated government debt and record individual debt and it never seemed to stop. The day of reckoning, however, is just around the corner at least according to the guy who runs America's General Accounting Office, the nation's Comptroller General, David Walker.
Walker is free to speak out. He's got job security until 2013. Now he's taking his campaign to the streets because he knows politicians don't want to speak about the looming economic crisis and people aren't much interested in hearing about it either.
The iceberg heading America's way are what they call 'entitlement' programmes: medicair, medicaid and social security. The U.S., like most western countries, has an aging population but one in which lifespans have been increased significantly in recent years. That spells a big wave of seniors calling upon these entitlements in the near future and calling on them for many more years than had been expected.
Entitlements are the iceberg but the second half of the problem is the ship that's steaming toward it, SS USA. While it should have been preparing the country for the changes coming, the governments - federal, state and municipal - have been binge borrowing. The Republicans have actually funded their tax cuts for the rich with foreign borrowings. Think about that for a moment.
Remember when Bush chastised Americans for being "addicted to oil"? That's only one addiction. The country and its people have become seriously addicted to debt. Family debt levels have never been as high. Home equity ratios have never been as low. Savings, forget about it.
America's current national debt totals roughly $8.5 trillion. The problem is it is growing at close to $2-trillion a year. If the government keeps on going, stays the course, Walker and others warn the debt could reach an adjusted figure of $46-trillion or more, roughly the net worth of every American, incluing he super rich ones.
There is only one solution and it's painful: raise taxes and slash entitlements. The fiscal mess of the U.S. federal government means there are no other choices. The country has been deliberately weakened to the point that it can't turn away from the iceberg.
There is one more problem: getting politicians to tell their constituents that they need to accept more taxes and fewer benefits. Politicians don't have that kind of courage today. An accountant who listened to Walker's speech came up with a good idea: get Oprah to convince the American people to support fiscal responsibility.
I'm sorry, we're broke
Here's how David Walker puts it, "This is about the future of our country, our kids and grandkids. ...We the people have to rise up to make sure things get changed."
We in Canada need to pay attention to this even if Americans won't. As their economy goes, so goes ours. Perhaps this would be a good time to work on diversifying our trade.
This is certainly an ideal time for us to take another good, hard look at our own debt situation. Remember how we did that when Chretien took over from Mulroney, how they explained to us the predicament we were in and what we needed to do? Our politicians have shown they can talk to us about these things and we've shown we're willing to listen and embrace fiscal responsibility.
But we've been taking a lot for granted over the last several years. Time to take a fresh look.
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