December 2001
December Questions & Answers and December Graph
by Joel Emes
Q: How much money do Canadian governments spend per person? How does this compare to government spending in the United States?
A: In 2001, Canadian governments will spend a total of $12,519 per person (all figures in US dollars) and the US will spend $11,266 per person, a difference of $1,253. However, both countries spend money on debt servicing costs, which is included in these totals. These costs represent the current costs of past deficit spending. Since there is no current benefit from most of this past deficit spending, the comparison is more relevant if we remove expenditures on debt service costs from the total. Table 1 shows the results. When debt costs are removed, Canadian governments will spend $1,085 per capita more than governments in the US in 2001. The information in table 1 and the above discussion are based on a Purchasing Power Parity conversion of Canadian spending data to US dollars. When the exchange rate is used instead, US government spending per person exceeds Canadian government spending by $1,669 per person in 2001.
Table 1: Real Government Expenditure Per Capita, US dollars
|
Year |
Government Expenditure |
Government Expenditure Less |
||||
|
US |
Canada |
Canada |
US |
Canada |
Canada |
|
|
1984 |
9,666 |
11,114 |
1,449 |
8,760 |
10,297 |
1,537 |
|
1985 |
10,120 |
11,700 |
1,580 |
9,162 |
10,727 |
1,565 |
|
1986 |
10,527 |
11,619 |
1,091 |
9,512 |
10,618 |
1,106 |
|
1987 |
10,627 |
11,487 |
860 |
9,592 |
10,443 |
850 |
|
1988 |
10,571 |
11,768 |
1,197 |
9,511 |
10,656 |
1,145 |
|
1989 |
10,703 |
11,944 |
1,242 |
9,593 |
10,724 |
1,131 |
|
1990 |
10,880 |
12,490 |
1,610 |
9,747 |
11,136 |
1,389 |
|
1991 |
10,845 |
12,602 |
1,756 |
9,672 |
11,373 |
1,701 |
|
1992 |
11,181 |
12,958 |
1,777 |
9,992 |
11,721 |
1,728 |
|
1993 |
11,063 |
12,778 |
1,715 |
9,927 |
11,578 |
1,651 |
|
1994 |
11,011 |
12,921 |
1,910 |
9,847 |
11,626 |
1,780 |
|
1995 |
11,060 |
12,784 |
1,724 |
9,850 |
11,308 |
1,458 |
|
1996 |
11,067 |
12,348 |
1,280 |
9,872 |
10,970 |
1,098 |
|
1997 |
11,057 |
11,949 |
892 |
9,895 |
10,642 |
748 |
|
1998 |
11,062 |
12,376 |
1,314 |
9,901 |
10,976 |
1,075 |
|
1999 |
11,135 |
12,150 |
1,015 |
10,096 |
10,842 |
746 |
|
2000 |
11,146 |
12,428 |
1,282 |
10,161 |
11,365 |
1,204 |
|
2001e |
11,266 |
12,519 |
1,253 |
10,390 |
11,475 |
1,085 |
|
2002e |
11,369 |
12,582 |
1,213 |
10,560 |
11,583 |
1,023 |
|
Note: e = estimate |
||||||
The December graph shows Canadian government spending relative to US government spending. Specifically, the bars labeled "percent of GDP" represent Canadian spending (as a percent of GDP) as a percentage of US spending. Similarly, the bars labeled "per person" represent Canadian spending per person as a percentage of US spending per person. In 2001, Canadian governments spent 37.0 percent more of GDP than their American counterparts, but this only translated to 10.4 percent more spending per person.
Table 2: Government Expenditure as a Percentage of GDP
|
United States |
Canada |
Canada less the US, |
|||||
|
Total Outlays |
Net Debt Service Costs |
Total |
Total Outlays |
Net |
Total |
||
|
1984 |
33.1 |
3.1 |
30.0 |
47.6 |
3.5 |
44.1 |
14.1 |
|
1985 |
33.8 |
3.2 |
30.6 |
48.1 |
4.0 |
44.1 |
13.5 |
|
1986 |
34.2 |
3.3 |
30.9 |
47.6 |
4.1 |
43.5 |
12.6 |
|
1987 |
33.9 |
3.3 |
30.6 |
46.2 |
4.2 |
42.0 |
11.4 |
|
1988 |
32.9 |
3.3 |
29.6 |
45.5 |
4.3 |
41.2 |
11.6 |
|
1989 |
32.8 |
3.4 |
29.4 |
46.0 |
4.7 |
41.3 |
11.9 |
|
1990 |
33.6 |
3.5 |
30.1 |
48.9 |
5.3 |
43.6 |
13.5 |
|
1991 |
34.2 |
3.7 |
30.5 |
52.3 |
5.1 |
47.2 |
16.7 |
|
1992 |
34.8 |
3.7 |
31.1 |
53.4 |
5.1 |
48.3 |
17.2 |
|
1993 |
34.1 |
3.5 |
30.6 |
52.2 |
4.9 |
47.3 |
16.7 |
|
1994 |
33.1 |
3.5 |
29.6 |
49.9 |
5.0 |
44.9 |
15.3 |
|
1995 |
32.9 |
3.6 |
29.3 |
48.5 |
5.6 |
42.9 |
13.6 |
|
1996 |
32.4 |
3.5 |
28.9 |
46.6 |
5.2 |
41.4 |
12.5 |
|
1997 |
31.4 |
3.3 |
28.1 |
43.9 |
4.8 |
39.1 |
11.0 |
|
1998 |
30.5 |
3.2 |
27.3 |
44.2 |
5.0 |
39.2 |
11.9 |
|
1999 |
30.0 |
2.8 |
27.2 |
41.8 |
4.5 |
37.3 |
10.1 |
|
2000 |
29.4 |
2.6 |
26.8 |
40.9 |
3.5 |
37.4 |
10.6 |
|
2001e |
29.6 |
2.3 |
27.3 |
40.8 |
3.4 |
37.4 |
10.1 |
|
2002e |
29.5 |
2.1 |
27.4 |
40.3 |
3.2 |
37.1 |
9.7 |
|
Note: e = estimate. |
|||||||
Q: How much of total government spending goes to cover interest on government debt in Canada and the United States? How is this expected to change over the next few years?
A: Canada has spent an average of 4.9 percent of Gross Domestic Product (GDP) on debt service between 1990 and 2000; projections for 2001 and 2002 show this ratio falling slightly from its 2000 level of 3.5 percent of GDP. The United States has spent, on average, 3.4 percent of GDP on debt service between 1990 and 2000; projections for 2001 and 2002 show this ratio falling from its 2000 level of 2.6 percent of GDP.
Note
The OECD data that this article is based on has changed several times in the last two years. These changes are the result of changes in the National Accounts of both the US and Canada.
Joel Emes (joele@fraserinstitute.ca) is Senior Research Economist at The Fraser Institute. He has an M.A. in Economics from Simon Fraser University.
info@fraserinstitute.ca
4th Floor, 1770 Burrard Street, Vancouver, BC, Canada, V6J 3G7
Tel: (604) 688-0221 Fax: (604) 688-8539 Book Orders: 1-800-665-3558 ext. 580
You can contact us at the above email address for any comments or information requests. Please report any dead links or technical problems.