The madness of deficit spending - A special report from Maclean's magazine



    TORONTO, Jan. 15 /CNW/ - As the current economic crisis becomes further
entrenched, the Conservative government is preparing to run a string of
"stimulative" deficits, the likes of which we haven't seen since the early
1990s. But can we really spend our way out of this fiscal mess?
    Maclean's national editor Andrew Coyne says absolutely not. It hasn't
worked before, and the remarkable re-embrace of deficit spending-by
politicians and economists alike-is every bit as mindless as the financial
panic that preceded it.
    Why is Canada of all places, which suffered more than most from a
previous generation's experimentation with deficit finance, going down this
road again?
    So little fresh evidence has been offered of its effectiveness, and so
much of the original critique that first discredited deficit spending in still
intact, argues Coyne. Plus, all it would take to send a $40-billion deficit
spiraling even further out of control would be a sustained spike in interest
rates.
    What is required instead, are measures to address the problem at its
roots: the disease, not just the symptoms. And a certain amount of "taking our
medicine" must be prescribed: Banks need to repair their balance sheets,
consumers need to save more-and no amount of easy money can change that fiscal
fact.

    PLUS: Speeding toward the abyss

    The U.S. is on pace to take on $10 trillion in debt over the next decade.
What happens when America's credit runs dry? The time for denial is over and
the U.S. must face what some call its "fiscal child abuse."
    This week's Maclean's is on newsstands Thurs., Jan. 15

    About Maclean's

    Maclean's is Canada's only national weekly current affairs magazine.
Maclean's enlightens, engages and entertains 2.8 million readers with strong
investigative reporting and exclusive stories from leading journalists in the
fields of international affairs, social issues, national politics, business
and culture. Visit www.macleans.ca.





For further information:

For further information: Louise Leger, (416) 764-4125,
louise.leger@rci.rogers.com

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