by Jason Clemens, Milagros Palacios, Robert P. Murphy, Sean Speer
March 20, 2014
To many, California represents the epitome of irresponsible government spending coupled with poor cash management. However, the province of Ontario is carrying a much worse debt burden than California. For instance, in comparing the outstanding gross amount of debt in the form of government-issued bonds, California (in the most recent year for which the data are available) carried US$144.8 billion while Ontario carried CAD$267.5 billion, almost double California’s amount. The gross debt in the form of bonds is 7.6% of California’s economy, while it is a whopping 40.9% of Ontario’s economy. The solution to government debt problems are the same as for a household: spending must be brought in line with income. Fortunately, no harsh cuts are needed in Ontario’s case; restraint in the growth of provincial spending will return the province to financial security.