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Canada's got the stimulus plan right

Commentator David Frum.

TEXT OF STORY

Kai Ryssdal: It was a public policy grab bag for the President today out in Wakarusa, Ind. He talked health care for a while. He promised to get a reform bill passed by the end of the year. And he played up his economic stimulus package, too. He announced almost $2.5 billion in stimulus grants for electric car manufacturing. Stimulus has been a theme of his the past couple of days. Last week he said the improvement in economic growth shows his spending plan is working. Commentator David Frum says not all stimulus plans are created equal.


DAVID FRUM: Economic bad news is arriving at a slower pace these days. Some days there's even good news, like the jump in home sales in June. These glimmers have led one newsmagazine to pronounce the recession over.

Not so fast.

But there is another economy in North America where optimism does seem justified: north of the border.

The Bank of Canada predicts the Canadian economy will resume expansion in the fall, the first G7 economy to emerge from recession. Canada's central bank predicts 1.3 percent growth in the third quarter of 2009; 3 percent in the fourth.

To some extent, Canada is benefiting from unplanned good luck. Canada's housing market did not inflate the way America's did, so it had less far to fall. Natural resources constitutes a larger share of the Canadian economy than in the United States, so Canada profits more from China's recovering demand for raw materials.

But policy matters too.

Like the United States, Canada adopted a stimulus plan. But while the U.S. plan amounted to 5 percent of GDP over three years, Canada's plan gave a jolt of 2.5 percent, in only a little more than one year. So Canada got more bang for less buck. If both country's projections prove accurate, Canadians in 2015 will shoulder only about one-third as much debt per person as Americans.

More and more, the $800 billion stimulus plan is looking like a great mistake -- too much long-term debt for too little immediate benefit, all of it too closely tied to the Democratic party's political imperatives in the 2010 election cycle.

The result: an unemployment rate in the United States fully one point higher than in Canada. To paraphrase a television commercial familiar to Canadians of a certain age, "Only in Canada? What a pity."

RYSSDAL: David Frum is a resident fellow at the American Enterprise Institute.

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Well that's True Smith of Austin... It is true that a Rep Congress back in...2000 I think... passed the legislation that was sign by Clinton, a Dem Pres, that allowed investment banks to take outrageous bets - on ANYTHING - using Credit Default Swaps...something that was OUTLAWED back in 1907 because more or less the same thing was happening.. .and the states stopped it by outlawing it.. The Rep legislation of 2000 signed by a Dem pres... more or less repealed that forbidden legislation.. Clinton owned up to this on the Letterman show... Clinton also owns up to pushing easy mortages because housing was one of the few ways to pump momey into the economy given the DotCom boom/bust had very much limited their options...

On your 30 year comment... I assume you are talking about Carter...but I don't know the details...

But...The Frum debate is not a Dem/Rep thing... we're all saying the same thing... and that is ... Frum uses questionable logic to come to conclusions that are.... hmmmm.... questionable.... whether you are a Rep or Dem....

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Ok.. let's try one more approach to this.. Let's say that Frum's arguments are good logic... His case basically boils down to... This works in Canada... .so this is what we should do in the US... ok... accept it at face value...

Then by extrapolation... Socialized Medicine works in Western Europe.... with Swenden and Norway having the best... The UK having some problems.. Extrapolating from the FRUM logical.. it works in Europe.. so...It must be applied to the US.... simple...

There you have it... Frum also made the case for Socialized Medicine...

I'm teasing... I believe health care reform is necessary..... Government sponsored healthcare may or may not be the right way to do it ... debate is good... even counter intuitive...

Frum fussy logic though.... not so sure...

Some of you whiny Dems need to look who sponsored and or passed (and/or signed) the legislation that allowed our Financial Sector to "run amok". The Dems aren't totally devoid of responsibility for this and other crappy legislation that led to trouble the past 30 years.

Someone needs to go directly up to Mr. Frum's face and put him in his place.

Canada has universal health care. Canada has a smaller population. Canada's financial system is a fraction the size of the United States. Canada's overall GDP is way smaller than the United States's GDP. Last I checked, Canada is also not on the leading edge of technological innovation - that crown still belongs in Asia, and maybe Silicon Valley (unless you want to count Nortel Networks).

The $800 billion stimulus is ridiculously huge, but so is the problem in the USA; Canada's problem, in comparison, is almost regular recession material. While the Canadian government steers its yacht back towards safe harbor, the overloaded American cargo ship has just figured out where the leaks are and is frantically trying to seal them out, even while it is foundering in open ocean. What's the difference? About a trillion dollars. If you want a smaller solution, you should find a smaller problem to fix; either that, or you should cleave the United States clean down the middle and deal with each side piecemeal.

Let's also not forget the TARP funds that wasn't approved by the Democratic Party. Let's thank the former chairman of Goldman Sachs, the reddest, most fiscally responsible Republican you can find, for saving the biggest richest fattest smartest companies on earth, who somehow feel they have the right to wash their hands of everything now that they feel profitable again. Nothing wrong with that picture there.

I've been listening to this show for years, and since the market meltdown last autumn all we've gotten from this guy is a bunch of negativity. What's his solution to fixing this crisis? If he didn't know back then what we all know now, what would he have proposed? If you're going to dish it out you have to deliver an alternative proposal, but as a commentator I don't think he really has that responsibility.

Thanks, Mr. Frum, for revealing again what the Republican party really is: a big, dangerous, whining baby, throwing a temper tantrum.

And David Frum left out one very important fact:
That Canada did not allow it's financial markets and banking sectors to run amok as our government did. Not long ago, Canada's banking/financial system was ranked #1 in the world while ours was, and still is, struggling to climb out of the toilet.

Now that Canada is doing so well, Mr. Frum can return to his country! Bon Voyage!

Now Mr. Frum can return to his country! Bon Voyage!

Mr. Frum fails to note that while the U.S. had a budget surplus in 2000, George W. Bush quickly implemented tax cuts during a period of economic growth ensuring that deficit spending would continue. Canada had several years of deficits with the worst string occurring during Brian Mulroney's Conservative leadership. Under the Liberal Governments, Canada began 12 consecutive years of budget surpluses. This allowed them to follow Keynesian economic principles, endorsed by Canadian economist John Kenneth Galbraith, of paying down national debt in the good times so that the economy can be stimulated in a recession.

If Americans continue to ignore the deficit when the economy improves, that will be a real pity.

As the Heinrich Himmler for the wreckage of the past 8 years, Frum is in no position to criticize what needs to be done to clean up after the mess created by the neocon fantasies of him and his cronies.

Why MarketPlace continues to give a forum to his lies is beyond me, but surely you can find conservatives who are at least intellectually honest.

Dave Rakowski
Allentown, PA

I continue to believe that Frum's commentary is really a practical joke played on us... the listeners.. by Marketplace...

In this particular episode, David starts out by listing some interesting statistics about the Canadian stimulus plan... at least he is including some facts...

Then he he makes some .... inferences about the US version of the stimulus package...

Then he makes a comparison...

then he jumps to.... "What a terrible idea the US Stimulus package is..."

Trouble is.. .he again makes an "Apples to Oranges.. maybe Pomagranets" comparison... which allows him to apparently draw a conclusion.... US Democratic Stimulus ... bad....

Trouble here is... The bulk of the 10 Trillion dollar .. supposite increase in debt... isn't coming from the stimulus packate... which by the way is working.. and its only about 1/4 spent... oopps sorry .. I jumped to a conclusion.... I'll come back to that..

Let's look at a few things...

1. the wars in Iraq and Afganistan were funded by the republics completely ... OFF THE BOOKS.... Didn't we put a bunch of Enron execs in jail for doing that??? Just a thought! So the new Budget has to include formally recognizing the Bush part of the war... and then funding the upcoming part.... a double whammy....

Another Republican financial engineering technique was to take money from the Social Security Account... and move it into the General Account... So... guess what .. again something was financed without needing to recognize income.... hmmmmm.. don't we put company execs in jail for doing that? And again this financial engineering shuffle had to be backed out and recognized in the Obama budget... what are we up to now... I think about 3.5 Trillion... then there is a whole bunch of small things .. like cutting the NASA maintenance budgets.... Maintenance on Government Buildings ... Parks ... and so forth.. all of which now has to be recognized in the Obama budget....

I can go on but you get the idea...

If we are going to compare the Obama budget and stimlus you first have to back out all the correction needed to adjust from the .... off the books .... Bush financial engineering... put them back into the Bush budgets (don't we make companies who mis-state their books restate them... even 10 and 20 years back.. . Didn't GE just have to do that... and then compare the budgets.... Bet we find out the Obama spending is far less then the Republicans would have us believe...

Oh yea.... and wasn't TARP on the republican watch???

About the stimulas... let's see... Teachers, Police, Fireman, and other government employees schedule for layoff still on the job.... The auto Industry seems to be employing a few folks who otherwise were scheduled for HISTORY!...... I've certainly run into considerable road construction that otherwise wasn't going to happen... and the small increase in the paycheck... times 200 milllion paychecks..

And then there is the matter that the US is over 240 million people while Canada is under 50 million .. so yes their stimulus can be smaller...

As usually Frum is teasing us with a quick slight of hand and misdirection...

Why do I waste time listening to him...

Its a joke .. right?

I'm glad to see Mr. Frum has come to see the wisdom of our old friend John Maynard Keynes. Canada's stimulus may have been smaller than ours, but any and all stimuli are Keynesian in nature. More to the point, Canada's quick recovery shows that universal health care, generous unemployment benefits and strict financial controls are perfectly compatible with healthy economic growth. I hope the American Enterprise Institute continues to hire closet Keynesians like Mr. Frum. Go Canucks!

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