Even the world’s most resource-rich country has now been caught in the debt trap. Its once-proud government programs are being subjected to radical budget cuts — cuts that could have been avoided if the government had not quit borrowing from its own central bank in the 1970s.
Last week in Ottawa, the Canadian House of Commons passed the federal government’s latest round of budget cuts and austerity measures. Highlights included chopping 19,200 public sector jobs, cutting federal programs by $5.2 billion per year, and raising the retirement age for millions of Canadians from 65 to 67. The justification for the cuts was an out-of-control federal debt that is now over C$ 581 billion, or 84 percent of GDP. Continue reading