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US and Canadian Budgets: Doing the Math

Via Plastic, a story on the contrast between the US and Canadian economies:

Considering how tightly linked the U.S. and Canadian economies are, U.S. economic troubles must be dragging the Canadian economy down too, right? Wrong," NH4 writes. "As mass layoffs continue in the U.S., Canada enjoyed record employment growth in 2002. As U.S. consumer confidence continues to drop, Canadian consumer confidence is rising. And the day after U.S. President Bush announced a $670 billion package of tax cuts ostensibly designed to stimulate the flagging U.S. economy, Canadian Finance Minister John Manley announced that the Canadian federal government would have a Cdn$8.7 billion surplus in 2002-2003, with the surplus rising to Cdn$11.2 billion in 2003-2004. By comparison, the U.S. ran a $159 billion deficit in 2002 and a record merchandise trade deficit of $222.1 billion in the first half of 2002. The U.S. trade deficit is on track to break the 2000 record of $436.1 billion, especially with oil prices rising.
Why the difference in the budget numbers? Here's a thought:

From Statistics Canada, Canada's population in 2001 was 31,002,200. From the US Census Bureau, the US population in 2001 was 285,317,559. From the Canadian Forces, the defense budgets for the US and Canada in 2001 were USD$310.5 billion and USD$7.3 billion respectively. Doing the math, in 2001, Canada spent USD$235 per capita on defense, while the US spent USD$1,088 per capita.

Had Canada spent at the US rate of USD$1,088 per capita, their total defense budget would have been USD$33,730,393,600, or CDN$52,315,840,473. Projecting forward into 2002-3, instead of a CDN$8.7 billion surplus, Canada would have run a deficit of CDN$43.6 billion. Had the US spent at the Canadian rate of USD$235 per capita, their total defense budget would have been USD$67,049,626,365. Projecting forward into 2002, instead of a USD$159 billion deficit, the US would have run a surplus of USD$84.5 billion.

Per the Canadian Forces, the 2001 US defense budget was 2.9 percent of GDP, while Canada's was 1.1 percent of GDP.

Is Canada spending too little? I blogged in November about the Canadian Coast Guard running out of money to replace uniforms. The presently impassable Northwest Passage could become navigable within a dozen years, and it's not at all clear that Canada can defend its territorial claims there.

On the other hand, is the US spending too much? For $310 billion per year -- projected to rise to $379 billion this year -- what are we getting for our money? Are we secure as a nation? What anticipated threats exist that require such expenditures? Is our military designed to deal with the problems of today's world? How, for example, is our military might serving to resolve the crisis on the Korean peninsula?

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