But if you look at the graph, it's pretty clear the big shift has less to do with any drastic change in American spending patterns, and far more to do with a drastic change in Canadian habits:
And if you go back to the original source of the graph -- Canada's National Post, a Conrad Black newspaper -- it seems that some Canadians view this as a welcome change in Canadian policy that will result in Canada crushing the hapless US through competitive tax advantages:
We peak in the early 1990s with public spending at Scandinavian -- and scandalous! -- levels of over 50% of GDP.
But then our spending starts declining (as a share of GDP, though not in absolute terms). Some of the improvement is cyclical, reflecting recovery from the early-1990s recession. But the decline continues on into good economic times, to the extent that now public spending is virtually the same share of the two countries' GDPs.
Just how far apart the two shares remain depends on precisely which data series you use to track them. Different definitions of "public spending" give slightly different results. But the general message holds no matter which series you use: Expenditure-wise, we're now more like the Americans than we have been in decades.
[...] It's not inconceivable that in five years' time, we'll be spending less through our public sector than the Americans are through theirs. And if both countries get back to balanced budgets, that means the tax drag will be less here than it is there.
Getting your mind around the possibility that we will be the lower-tax jurisdiction in North America takes some doing, but in fact that was the case during the 1950s, some of the best economic years in our history.
[...] The tax rate isn't the only reason companies decide to set up in a jurisdiction, or why companies already here decide to invest more, but it's surely one reason. If we can have a lower tax rate than the Americans and still provide the public services that suit our own Canadian needs, that's going to give Canada an important economic advantage.
And who presided over that big jump from 1989-93? Brian Mulroney and the Tories. And of course the now irrelevant Liberal Paul Martin gets credit for the 1995 austerity budget and cuts that followed. Not unlike Reagan spending and Clinton cutting...
I went to college in Canada from 1995-99. Those spending cuts were ultimately self-destructive - everything you might expect from your education got slashed - and huge numbers of new graduates left the country. It's not a strategy for success, and it was reversed a little too late to have any impact on me.
So lets look at the entire time frame, so Mulroney was 84 to 93.
Oops, tories contain the growth of government expenditure after their election. To bad you werent here during that time because every cut was opposed with vociferous obstruction by those same liberals.
Other fact, not shown in this graph, was that the expenditure explosion in 74 (a liberal government) led to structural deficits. The tories got those contained by 86-87 so the deficit at the time was only due to interest on the accumulated debt. Those operational surpluses were maintained even during the deep recession of the early 90's (which was the cause of the spike in govt expenditures).
The GST (a value added tax) started spewing money like a firehose in the 94-95 time frame, combined with drops in interest rates and the cuts you mentioned full surpluses began along with debt repayment.
A value added tax will happen in the US since it is the least destructive way for the US to pay back this enormous debt they are accumulating. Some will not see it that way, but I bet it is on Obama's agenda for 2013.
You might want to tell your US audience what your tuition was and let them drool over how low it was compared to their own.
So the meme of Conservatives spend and Liberals are responsible isnt exactly true. A better analysis is Liberals spend, and now tax to avoid a deficit, they didnt use to. Cons during this time have spent a little less, but run the deficit keeping taxes low, although in Canada they maintained a surplus until this current FY. The logical end point of tax and spend is the UK, who are in danger of default. The US, for all its financial faults still retains significant tax capacity, the UK is or has run out of that.
Obama CAN pay that debt back, it will be politically costly but the likely answer will be a national VAT. US is last major economy without one, combined with a significant income tax cut it might just get passed.