The U.S. has a huge financial cliff looming within the next two months.
The Bush tax cuts, and some other tax cuts, expire at the end of the year.
It’ll open up a huge hole in the federal budget unless something is done.
Canadian economist Niels Veldhuis was the featured speaker at this month’s meeting of the Economic Club of Marquette County.
He told the group that Canada can serve as an example, since it went through a similar situation in the mid–1990’s.
Veldhuis says in 1995, the Wall Street Journal called Canada an honorary member of the Third World because of its government debt, but he says the country tackled the problem over the next several years.
Canada had a balanced federal budget within three years.
He says most of the changes came in the form of spending cuts rather than tax increases.
Veldhuis also says the country had a primarily center-left government at the time, so he believes the budget issue is one of arithmetic rather than partisanship.
The club is hosting Spencer Stang on December 10th; he’s the owner and founder of Stang Decision Systems, a Marquette consulting firm.