Yes, yes. Politics on a gaming blog is bad for business. However, I can't resist!
In the mid 90's Canada faced a very similar debt crisis - debt to GDP pushing 70%. Outrageous spending. Madness. The Federal Party at the time was the Liberal Party of Canada (I can already see my Republican American friends shuddering) and at that time Prime Minister Jean Chretien, and his Finance Minister Paul Martin, set a course to balance the books.
- Between 1995 - 1998 they cut Government spending by 14%
- For every ~$6 in expenditure cuts, they increased tax revenues by $1
- Unemployment dropped from 11.6% in 1995 to just over 6% by 2007
- Canada ran a budget surplus every year from 1998 to 2007
- Marginal tax rates very similar on individuals (27% USA, 31% Canada)
- Corporate tax rates better in Canada (Federal/Provincial) ~26% vs USA (Federal) 35% + State Corp tax of 0 - 4%
Here is the fun chart. Please remember that Canada's economy is tied VERY closely to the USA one.
While both economies were hit hard by the recession, the fallout and the result of it all didn't hit Canada nearly as hard. We are also leveling off the up curve really well.
I know it's far more complicated than just posting fancy charts, etc. My point here is that a 'socialist' country that provides universal health care and other expensive social programs with similar/lower taxation than our close friends south of the border can clean up their mess, the USA should be able too to.
Of course, it depends on if the political system will allow it to. Good luck my friends, and please remember that your friends up north and other good chunks of the world have figured this out before. Call if you need help.