creators.com opinion web
Liberal Opinion Conservative Opinion
John Stossel
John Stossel
29 Oct 2014
Incumbents Always Win

I'm told that the public is "angry" at today's politicians. Eighty-two percent disapprove of the job Congress … Read More.

22 Oct 2014
Federal Persecutors

A group of Washington overlords — federal prosecutors — sometimes break rules and wreck people's lives. … Read More.

15 Oct 2014
Crumbling Constitution

Does the Constitution still matter? When it was written, Ben Franklin said the Founders gave us a republic, "… Read More.

The Money Hole

Comment

America is falling deeper into debt. We're long past the point where drastic action is needed. We're near Greek levels of debt. What's going to happen?

Maybe riots — like we've seen in Greece?

We need to make cuts now.

Some governors have shown the way. You know about Chris Christie, Scott Walker, Rick Scott, John Kasich, etc. But you probably don't know about Luis Fortuno.

Fortuno is governor of Puerto Rico. Two years ago, he fired 17,000 government workers. No state governor did anything like that. He cut spending much more than Walker did in Wisconsin. In return, thousands of union members demonstrated against Fortuno for days. They clashed with police. They called him a fascist

Fortuno said he had to make the cuts because Puerto Rico's economy was a mess.

"Not just a mess. We didn't have enough money to meet our first payroll."

Fortuno's predecessors had grown Puerto Rico's government to the point that the state employed one out of every three workers. By the time he was elected, Puerto Rico was broke. So the new conservative majority, the first in Puerto Rico in 40 years, shrank the government.

What was cut?

"Everything. I started with my own salary."

The protesters said he should raise taxes instead of cutting spending.

"Our taxes were as high as they could be, actually much higher than most of the country. So what we've done is the opposite." Fortuno reduced corporate taxes from 35 percent to 25 percent. He reduced individual income taxes. He privatized entire government agencies.

"Bring in the private sector," Fortuno said. "They will do a better job. They will do it cheaper."

Fortuno's advice for leaders who want to shrink the state: "Do what you need to do quickly, swiftly, like when you take off a Band-Aid. Just do it. And move on to better things."

Canada did that years ago.

When I think Canada, I think big government. I'm embarrassed that I didn't know that in the mid-'90s, Canada shrank its government. It had to. Its debt level was as bad as ours is today, almost 70 percent of the economy. Canada's finance minister said: "We are in debt up to our eyeballs.

That can't be sustained."

Economist David Henderson, a Canadian who left Canada for the United States, remembers when The Wall Street Journal called the Canadian dollar "the peso of the north." It was worth just 72 American cents. "Moody's put the Canadian federal debt on a credit watch," Henderson said.

The problem, he added, was that Canada had a government safety net that was more like a hammock.

"When I was growing up in Canada, people who went on unemployment insurance were said to go in the 'pogie.' You could work as little as eight weeks, taking the rest of the year off."

So in 1995 Canadian leaders cut unemployment benefits and other programs. It happened quietly because it was a liberal government, and liberals didn't want to criticize their own. The result was that Canada's debt stopped increasing. As the government ran budget surpluses, the debt went down.

"The economy boomed," Henderson said. "Think about what government does. Government wastes most of what it spends, and so just cutting government and having that money in the hands of people means it's going to be used more valuably."

Canada fired government workers, but unemployment didn't increase. In fact, it fell from 12 percent to 6 percent. Canadian unemployment is still well below ours. And the Canadian dollar rose from just 72 American cents to $1.02 today.

Canada also raised some taxes. But the spending cuts were much bigger, six to one: agriculture was cut 22 percent; fisheries, 27 percent; natural resources, almost 50 percent.

"We should learn from Canada's experience that you can cut government substantially," Henderson said. "It is so wasteful. There's so much to cut, without causing much real pain — not causing pain, but helping your economy grow, helping people become better off."

Henderson added, "We need to move more quickly than the Canadians did. Unfortunately, we're moving more slowly than the Canadians did."

If we're moving at all.

While Canada thrives, we pour more money down the hole.

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel, visit his site at <a href="http://www.johnstossel.com" <http://www.johnstossel.com>>johnstossel.com</a>. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

COPYRIGHT 2011 BY JFS PRODUCTIONS, INC.

DISTRIBUTED BY CREATORS.COM



Comments

5 Comments | Post Comment
Your show the other night "The Money Hole" was one of the best and informative (eye opener) show I have seen in a long, long time. It was very well done and to the point. I could tell a lot of thought and research had gone into it. One of the best segments was the one on Puerto Rico and Canada how they turned themselves around, being in the same predicument we are in. It was good to see that they saw the problem and did something to remedy it even though it was unpopular at first and there was a lot of protesting. But it proved to the people in the end it was the right choice.
Comment: #1
Posted by: Pat Hill
Tue Jun 14, 2011 7:23 PM
I must disagree with you on this at this time. While it is true that Canada succeeded with an austerity program in the mid-90's, that was a charmed time: Commodity prices, particularly petroleum, were falling, giving a boost to world economies, and new technologies, particularly the final stages of universal PC adoption, were greatly improving productivity. It was a great time to make investments. Freeing up capital from gross misapplication to government had a real and fairly prompt payoff.
Today, there is no demand for capital. Our government has just assumed the private debts of the large banks (a terrible thing for which we will be paying for generations) and these banks have capital but no one to whom to lend. Deleveraging is the immediate requirement, both public and private. Under these circumstances, we cannot expect a large nor an immediate return from transferring capital from government to the private sector.
That does not mean that we should keep pouring money down the same old rat holes: farm subsidies (especially ethanol and sugar), over-generous government employee salaries and pensions, near-permanent unemployment payments, regulations on regulations, import barriers, etc. It does, however, mean that it is a poor time to cut back on education and infrastructure, since these are activities that the government can do that will have long-term positive impact on the economy. In fact, these investments should be increased, even at the expense of delaying governmental deleveraging.
Comment: #2
Posted by: Mac McFarland
Wed Jun 15, 2011 11:38 AM
Very good column. I agree we throw money away on useless subsidies etc. We need to get the country working again. To do this we need to get off the man made global warming kick. It doesn't exist. We need to eliminate/reduce subsidies on oil drilling, green energy, farming and a large number of other items.We need to allow drilling in Alaska , off shore and in various other areas. We need to eliminate/revise the restrictive regulations that are detrimental in starting and maintaining industry and businesses. By the way did OB go to Puerto Rico and announce that he is helping them out and thereby claim that he is responsible for their success rather than the Puerto Rico governor to get votes for 2012?
Comment: #3
Posted by: wally mattson
Sun Jun 19, 2011 11:23 AM
I am guessing that Canada is not spending money on needless wars or on obscene amounts of foreign aid.
Comment: #4
Posted by: Firebird
Mon Jun 20, 2011 7:39 AM
I love your show. I wrote a book in the 1990's, published in 2005. I said in my book what was wrong with this country and our government. It is controlled by greedy corrupt people. In America the Golden Rule has been tossed out the window. I predicted what was going to happen and people laughed. But, they laugh no more. Much of what I pred8icted has already happened and more is coming.
I have one question. WHY DO POLITICIANS WANT TO ONLY CUT BACK TO THE WORKING CLASS TAX-PAYERS? WHY DO THEY NEVER MENTION CUTTING THEIR OWN "ENTITLEMENT? IF THEY PUT THEMSELVES AND ALL GOVERNEMT EMPLOYEES ON SOCIAL SECURITY AND MEDICCARE, THE PROBLEM WOULD BE RESOLVED. WHY ARE THEY PRIVY TO LIFETIME MEDICAL BENEFITS AND HUGE PENSIONS THEY CAN DRAW BEFORE THEY ARE 65? THEY ARE ONE REASON THIS COUNTRY IS GOING BROKE.
YOUR SHOW TELLS IT LIKE IT IS AND SOMETHING SHOULD BE DONE TO STOP CORPORATE AND POLIIICAL GREED AND CORRUPTION. START BY GETTING RID OF LOBBYISTS. I PREDICTED ALL THIS IN MY BOOK "THE DEVIL'S REIGN."
Comment: #5
Posted by: George
Mon Jun 20, 2011 12:56 PM
Already have an account? Log in.
New Account  
Your Name:
Your E-mail:
Your Password:
Confirm Your Password:

Please allow a few minutes for your comment to be posted.

Enter the numbers to the right:  
Creators.com comments policy
More
John Stossel
Oct. `14
Su Mo Tu We Th Fr Sa
28 29 30 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31 1
About the author About the author
Write the author Write the author
Printer friendly format Printer friendly format
Email to friend Email to friend
View by Month
Marc Dion
Marc DionUpdated 3 Nov 2014
Brent Bozell
Linda Chavez
Linda ChavezUpdated 31 Oct 2014

20 Jun 2012 Regulating Political Speech

9 Apr 2014 Taxing Life Away

6 Aug 2008 The Sky Isn't Falling