Is the Debt War Over?: Dispatches from Canada's Fiscal Frontline

Graeme S. Mount is a professor of history at Laurentian University. He
is the author of Canada’s Enemies: Spies and Spying in the Peaceable
Kingdom, Chile and the Nazis, and The Diplomacy of War: The Case of
Korea.

The submissions in this book first appeared as conference papers in
October 2002, when the Liberals still held office and Finance Minister
Paul Martin had eliminated the deficit. Pundits and politicians debated
whether federal authorities should, under the circumstances, reduce
taxes, pay down the debt, or fund new programs. One or two presenters
and a discussant presented their views on the following questions: How
big is the debt? Where did the debt come from? What do we get for public
indebtedness? Does the debt matter? What does the debt cost us? What
should we do about the debt? How should we manage the debt? Do we need
fiscal rules? What is the real issue in the debt debate? Is the debt war
over? What have we learned?

There is no unanimity on any of these questions, but some points are
obvious. Governments, like individuals and corporations, cannot forever
live beyond their means. If they spend money that they do not have and
others refuse to make further loans, governments—even democratic
ones—cannot finance their programs. The bigger the debt, the higher
the amount of interest that must be paid on the debt and the less money
there will be for new programs or tax cuts. Overspending by one
generation necessarily obliges another to make sacrifices: either to pay
the

earlier generation’s bills or to forgo some desired programs. Deficits
may disappear, but changed circumstances (such as a war or a health
crisis) or another government can make them reappear.

This book is heavy reading, aimed largely at theorists and
practitioners with a background in economics. The writers should be
congratulated for discussing such issues, and they should consider
hiring a journalist trained in economics who can convey the message to a
wider segment of the voting public. While the submissions in this book
use Canadian data, the message is universal.