It would appear that there is a significant constituency in both the US and in Europe agitating for immediate efforts to reduce their respective governments' deficits, and some are pointing to the Canadian experience of the 1990s. If Canada could make the swift transition from decades of large and chronic deficits to being the poster child of fiscal rectitude with no apparent ill effects, then why can't everyone else?
The answer is that Europe and the US in 2010 is not Canada in 1995, in pretty much every way that matters.
1) Canada waited until the recession was over before embarking on an austerity program. Here is a graph of public and private sector employment in the 1990s:
Climbing out of the recession of the early 1990s was a long, brutal grind - much like what the US and Europe have ahead of them. It took five years for private-sector employment to return to its previous peak. This was no time to start reducing public sector employment, and Canadian governments didn't try.
But by 1995, private-sector employment had returned to its pre-recession peak and the expansion was well under way. It was only then that Canadian governments started their austerity programs.
2) The austerity program was not painless. Much of the federal austerity program took the form of cuts to transfer payments to the provincial governments, who in turn were obliged to close hospitals and schools.
3) Canada is a small open economy whose currency could depreciate dramatically against its largest trading partner. And boy, did it ever. Exports were the biggest contributor to Canadian GDP growth during the 1990s.
If you're going to count on exports to sustain aggregate demand while your government cuts back, you have to figure out which foreign economy is supposed to absorb all that extra production. Canada's response to that question in 1995 was an expanding US economy that was ten times as large. It's hard to see what sort of answer US and European policy makers can come up with.