Role of Government

Anchors To Secure The Future

A broad consensus has formed around the idea that a plunge into the red is a frightening but unavoidable consequence of the economic downturn, and the fiscal laxity that preceded it. This would be much easier if new fiscal anchors, notably a specific debt-to-GDP ratio, had been firmly established after the books were balanced. An additional anchor, limiting program spending to a percentage of GDP, would further prevent Canada from sliding into a long-term pattern of deficits.

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Fiscal Restraint in the States

One fiscal-discipline measure that enjoyed some success in limiting the growth of government during the 1990s is that of the Tax and Expenditure Limitation, or TEL. TELs restrain government growth by limiting the amount that expenditures or revenues can increase in any given fiscal year.