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from Chretien

With President Bill Clinton’s state visit to Canada this week, some observers think he might take the opportunity to pick up a few pointers on political popularity from his counterpart in Ottawa.
Prime Minister Jean Chretien is rolling along on the wave of support that swept him into office 16 months ago. So far, Canadians appear to believe he can do no wrong.
His popularity has not been hurt, of course, by explosive growth in the Canadian economy. Canada’s gross domestic product grew by an estimated 4.3 percent last year, and experts say it could expand by an even faster rate in 1995.
Profits of Canada’s leading companies showed a threefold increase in the fourth quarter, compared with the same period a year earlier.
And inflation is near zero. That fact, and the decline of the Canadian dollar, has put a fire under exports. Indeed, sales of goods to this country rose 23 percent last year.
The U.S. economy has been doing quite nicely too, but President Clinton gets little credit for it. Can Prime Minister Chretien show him the way?
A better question might be: Can Canada’s leader stay on top in the polls and at the same time attack the threat to his country’s economic well-being?
Thanks largely to its generous social welfare system, Canada’s federal debt has reached astonishing heights. It equals roughly 75 percent of the country’s GDP–quintupling since 1981–and funds needed to service it soak up 35 percent of federal revenues.
In a few weeks the prime minister will unveil his budget plan for the next fiscal year. If he fails to take strong measures–spending cuts and/or tax hikes–Canada could hit the “debt wall,” where rolling over maturing obligations becomes unbearably costly. It also could see the Canadian dollar attacked by currency speculators.
But tax hikes and spending cuts are, well, unpopular.
President Clinton presides over more modest economic growth than does Canada’s leader, but his deficit challenge pales in comparison. If Prime Minister Chretien has what it takes to make tough decisions and stay popular, he offers a lesson worth learning.


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