Climbing out of debt

Submitted to Canada's debt

Economists generally agree the best way to reduce debt is to cut spending and not increase taxes. A study for the International Monetary Fund (IMF) by Alberto Alesina, Carlo A. Favero, and Francesco Giavazzi offers more evidence that cutting spending is less harmful to growth than raising taxes.

They also found that the best way to lower spending was to trim government entitlements and transfer programs because taxpayers view these as permanent cuts that will help lower taxes.
Businesses respond favourably to cuts rather than tax hikes to stimulate investment. Countries that chose tax-based austerity suffered deeper recessions than those that chose to cut spending.
Rising interest rates in countries with high debt may be on an unsustainable path. Eventually  fiscal stabilization must occur. The longer the delay, the more taxes must be raised (or spending cut) in the future. Stabilization removes uncertainty about further delays that would have increased the costs even more.

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Link to article here.