There is a rather embarrassing (for Liberal partisans) video floating around the Internet. It shows Finance Minister Bill Morneau doing his very best to avoid answering some fairly simple and straight forward questions put to him in the House of Commons, during a session of the Special Committee on the COVID-19 Pandemic, by Conservative
pit bull finance critic Pierre Poillievre. Minister Morneau, who is a very smart fellow, by the way, has all the numbers Pierre Poillievre wanted in his binder, they are refreshed for him every day, but he has been instructed, by the Trudeau campaign team, to only recite the PMOs ten-second talking points, the ones that we know that Rosemary Barton will, faithfully, repeat on the CBC TV News, about “investing in Canada” and running up record deficits so that “Canadians don’t have to borrow.”
Mr Morneau knows, of course, that, as CTV News reports, Canada’s “Parliamentary Budget Officer Yves Giroux says it’s “not unthinkable” that the federal debt could reach $1 trillion during this fiscal year as the economic response to the COVID-19 pandemic continues.” He said that the other day, also under questioning by the indefatigable M Poillievre. It’s something that has been widely reported upon … and it should worry Canadians. It is possible, a CBC News report suggests, that “pandemic programs could cost more than what the entire federal government spent last year on everything — which was roughly $337.8 billion for the 2018-19 fiscal year” … and that makes a $1 Trillion debt a very distinct possibility.
The Debt to GDP Ratio is something that, as late as last December, the Trudeau Liberals have talked about at length as they justified turning the balanced budget that Stephen Harper left behind into one that had a whopping deficit before the pandemic struck. The Liberal thesis was that with interest rates low and the Canadian economy doing very well, it was a good time to borrow. The public record says that about a year ago Canada had a GDP of about $2.2 Trillion and a net debt of $768 Billion for a Debt to GDP Ratio of about 34%, which is pretty good compared to fellow G-7 members like Germany at about 62%, the United Kingdom at almost 90% and Japan at nearly 200%. Even with a Trillion dollar debt Canada’s Debt to GDP Ratio would be under 50%. (For other comparisons: Australia, to which many people, including me, often compare Canada, has about the same (35±%) level of Debt vs GDP while the USA has a Debt that is more than 100% of its GDP.) There are many different ways to measure both debt and GDP and some analysts are far less optimistic than is the Government of Canada … by some measures Canada is on par with the USA, but still far, far below Britain and France.
One problem with the Trudeau regime’s economic policies for the past four years was that they violated one of John Maynard Keynes’ key principles. Politicians, of all stripes, always remember that Keynes said that governments should spend when there are deep recessions or depressions, but he also said that when the economy is recovering and growing governments should pay down their debt ~ not run up increasing debts ~ in order to be ready for the next, inevitable financial downturn. Stephen Harper did that, immediately after the Great Recession of 2008/09 and he left office with a balanced budget. Justin Trudeau ignored Keynes and spent and borrowed and added new taxes when he should have been saving and paying down debt.
The first, simple, question is: can we, Canada and, indeed, the G7 plus China, the EU and India, bear the cost of the coronavirus pandemic? The short answer, according to economist/journalists Julian Jessop, writing for CAPX, is “yes,” with a little bit of luck and some half-decent management. My guess is that if the UK can survive a pandemic induced deep recession or even a short depression then Canada can, too.
The second question is: do Canadians care?
The federal government is handing out money. Canadians always like that … until the bills come due. In the 1980s former Prime Minister Brian Mulroney and his Finance Ministers, Mike Wilson and Don Mazenkowski tried to warn Canadians about the problems of huge deficits. Canadians didn’t get excited until 1995, when the prestigious “Wall Street Journal dubbed Canada “an honorary member of the Third World” in an editorial that referred to the Canadian dollar as the “northern peso.”” Canadians got scared and Jean Chrétien and Paul Martin Jr, neither really instinctive fiscal conservatives, sprang into action. The same might happen again, because, as Reuters reports, the Canadian dollar is weakening on worries about the US economy. The report resurrects that famous old line which says that “If the U.S. economy sneezes Canada catches a cold.”” In fact, in economic terms, a cheap Canadian dollar helps us to sell into international (including American) markets.
But the current debt load is too high. Prime Minister Trudeau is trying to:
- Buy votes in the next election by throwing money everyone and hoping that he can go to the polls and win a majority before people actually notice the high levels of debt and the interest payment that will inevitably, drive us deeper and deeper into debt; and
- Buy a worthless, temporary, second-class seat on the United Nations Security Council because … well, to be honest, I can’t figure out why any respectable country would want a temporary, second class seat on the UNSC enough to throw money around at corrupt, third-world despots who condone female genital mutilation and believe that homosexuals should be executed.
I believe that Team Trudeau has an agenda that is based on ideas from a variety of sources including (but certainly not confined to) e.g. George Soros and Greta Thunberg. Those ideas are expressed, here in Canada, by the representatives of the Laurentian Elites who want a Canada that is aligned less and less with the USA and the US-led West and more and more with a diffuse, ever-shifting array of countries and organizations that espouse the cause of increased globalization.
Foreign policy rarely matters a whole lot in Canadian elections ~ even after a string of disasters in his first term, Justin Trudeau was re-elected largely on a single foreign policy achievement: the renegotiated NAFTA could have been a lot worse:
The COVID-19 pandemic has created both opportunities and problem for Justin Trudeau. He gets to how money around and that will help with the next election IF it comes before the extent of his overspending is apparent. But, simultaneously, he finds himself, increasingly, on the wrong side of the China question. While more and more world leaders, not just Donald Trump, want to hold China to account for hiding the coronavirus situation just when openness was required, Canada seems, strangely, offside.
I suspect that the Chinese have offered us a deal … but a Hobson’s Choice, sort of deal. If we do as they want they will, somehow, in some undetermined way, reward us. Maybe they will support us for that worthless UNSC seat … or maybe they will use their very considerable influence in the UN to have countries vote against us. Maybe they will release the “Two Michaels,” which would be a foreign policy coup for Justin Trudeau … or maybe the “Two Michaels” will disappear, even deeper into the Chinese penal system and maybe more Canadians will be taken as hostage. I suspect the choices are, simultaneously, frightening and fascinating and, above all, tempting. Imagine the political triumph if, late this summer, Justin Trudeau flies to China and returns with both the Two Michaels and a trade deal which promises to address some of our financial worries.
Great Thunberg and the Wet’suwet’en hereditary chiefs might be disappointed, after the election, when they find that the Chinese have taken over the Trans Mountain Pipeline project and it (and other pipelines) will be built, quickly so that Canadian oil and gas can get to the Chinese market. The activists and the First Nations will, I fear, be surprised at how quickly and forcefully the government can ‘negotiate’ when it has Chinese officials prodding it. I don’t think that thee is any real ideological drive behind Justin Trudeau. It is, I suspect, just a combination of the old, knee-jerk anti-Americanism of the old-line Laurentian Elites, the belief, rooted in the Chrétien-Martin and Harper era, which I shared, in the benefits of globalization and a drive to stay in power at all costs that is driving Team Trudeau into China’s arms.
It’s no secret, it seems to me, that President Trump detests Prime Minister Trudeau … when he thinks about him at all. No one in Europe cares about Trudeau’s Canada. Prime Ministers Shinzō Abe of Japan and Scott Morrison of Australia and President Moon Jae-in of South Korea probably have trouble remembering Justin. Trudeau’s name. Canada has, in my opinion, rarely been this alone in the world, not since I was born (1942), anyway. We are alone because we elected a government that chooses to ignore our allies, even the very difficult one like the USA, and, instead, opts for the cloud cuckoo land of the United Nations and of a dream of globalization that is fading away quickly. While the world, including America and China, searches for self-sufficiency, Justin Trudeau’s Liberal Canada clings to a failed model of globalization. Canada is seriously out of step with the 21st century.
So, we sit on the brink:
- On the brink of an election that may give Justin Trudeau another majority;
- On the brink of breaking our traditional relationship switch the US-led West; and
- On the brink of a Trillion Dollar Deficit.