EDMONTON — Alberta Finance Minister Travis Toews says the goal in 2021 is to get vaccines out and put the COVID-19 pandemic in the rear-view mirror, then work to fix a battered and beleaguered economy.
But with a $21-billion deficit and Alberta’s wellspring oil and gas economy still in flux, there’s a red-inked elephant in the room: Where’s the money going to come from?
“We will not cut our way out of a $21-billion deficit,” Toews said in a year-end interview with The Canadian Press.
“We have to get the economy growing again. And economic recovery will very quickly become job No. 1 as we start to get past the pandemic.”
Roll the tape back to the start of 2020. Premier Jason Kenney’s United Conservative government was busy trying to resuscitate an already wheezing economy only to see COVID-19 blow everything apart and take with it Kenney’s signature election promise to balance the deficit in his first term.
That goal is a distant memory with a projected budget deficit this year tripling an original forecast of $6.8 billion. COVID-19 has slashed demand for energy, shuttered businesses and demanded relief aid and job supports to keep people going.
Toews said the plan is to get Alberta out of the financial ditch in February with the budget.
In November, he laid out “fiscal anchors” for the journey: keeping the net-debt to GDP ratio under 30 per cent, reducing public sector spending to match comparable jurisdictions and setting a timeline to get the budget back to balance.
University of Calgary economist Trevor Tombe said Alberta is in the enviable position of having options. It’s the lowest-taxed province, and oil and gas will continue to deliver billions of dollars to the treasury for the foreseeable future, though not in the same eye-popping amounts as boom times.
“But even if (the energy revenue) is significant, it won’t be nearly enough, so we need to shift gears on how we fund public services.”
By his number crunching, Tombe said if Toews is to meet his targets, Alberta will need to find an extra $7 billion a year if it wants to get the budget out of the red and start paying off a debt now projected to reach $97 billion in 2021.
Such talk raises again the spectre of a sales tax.
Alberta’s Social Credit government brought in a two per cent levy in 1936 and quietly dropped it a year later. After the Second World War, Alberta’s oil and gas economy exploded, allowing it to eschew the stability of a tax.
Sales tax is the third rail of Alberta politics and by law can’t be brought in without a referendum. Toews said it’s not in the cards, but he’ll strike a panel to revisit Alberta’s revenue generation.
Opposition NDP Leader Rachel Notley did not bring in a sales tax when she was premier before Kenney was elected in 2019. She agrees with the UCP that it would be a debilitating blow to a fragile economy.
Notley says the solution begins with further diversifying the economy and building on Alberta’s strengths of a young educated workforce, a burgeoning tech sector and entrepreneurial business owners.
Oil and gas are key, she adds, but warns that Kenney’s blinkered focus on them to the exclusion of other opportunities will be the province’s undoing.
“If (Kenney) continues to insist on operating through an ideological lens, which is squarely focused backward by about 25 years … then we are in big trouble.”
The economy is also a political question. The United Conservatives reach the midpoint of their mandate in 2021 and early initiatives, including a deep slash to the corporate tax rate, have yet to bear fruit.
Political scientist Duane Bratt said COVID-19 and the economy are destined to again slam into each other in 2021. The government has said that after the pandemic is over it will follow through on saving money in health care including reducing or outsourcing 11,000 jobs.
“How do you say, ‘Thank you for all the hard work (during the pandemic). Here are your layoff papers?’” said Bratt with Mount Royal University in Calgary.
Broadly speaking, Bratt said, the NDP is more trusted by the electorate on the health file, while the United Conservatives own the economy. That raises future ballot box questions two years from now, if the UCP has angered Albertans with its health decisions while failing to get the economy going.
Said Bratt: “If the economy trumped everything in 2019, does health trump everything in 2023?”
This report by The Canadian Press was first published Dec. 27, 2020.
Dean Bennett, The Canadian Press
Biden Faces Fresh Challenges on Covid-19, Economy – The Wall Street Journal
WASHINGTON—President Biden took office with the goals of overcoming the coronavirus pandemic, spurring economic growth and winning legislative approval for trillions in new spending.
Six months in, all three of his major objectives are being tested.
Covid-19 cases and hospitalizations are on the rise, spurred by the Delta variant and vaccine resistance from a slice of the population. Concerns over the spread of the pandemic have caused some turbulence in the financial markets and consumer prices are ticking up, prompting warnings about long-term inflation. A bipartisan infrastructure deal and a broader Democratic spending bill remain deep in negotiations and a long way from Mr. Biden’s desk.
During a cabinet meeting last week, the president in his public remarks highlighted his work so far but acknowledged some of the current pressure points. “I know it seems like a constant uphill climb…we’re making progress, but we’ve got a way to go yet,” Mr. Biden said of the vaccination effort.
He emphasized the need for “constant vigilance” against the virus, asserted that his economic program would “generate significant continued economic growth” and defended his infrastructure and antipoverty legislative plans as popular.
Since Mr. Biden took office, more than three million jobs have been created and nearly 60% of American adults are now fully vaccinated. When he reached an agreement with Republicans in June on a bipartisan framework for a roughly $1 trillion infrastructure proposal, he said it showed that bipartisanship was possible.
Now, Mr. Biden appears to be moving into a more challenging phase of his presidency. A Gallup poll released Friday put Mr. Biden’s job approval at 50%, the lowest mark since he took office. He is trying to convince skeptics—many of whom don’t support him politically—to get vaccines. He is seeking to ease public worries about price increases. And after investing much time in a bipartisan framework on infrastructure reached with Republican and Democratic senators, the White House now must help steer the bill to the finish line.
A new poll from ABC News/Ipsos released Sunday found that 45% of Americans were optimistic about the direction of the country—a drop from 64% expressing optimism in the spring.
Republicans say Mr. Biden’s policies will damage the economy. House Minority Leader Kevin McCarthy (R., Calif.) tweeted recently that “the Democrats’ inflation is destroying Americans’ hope for financial security.” And Senate Minority Leader Mitch McConnell (R., Ky.) has taken to calling the spending plans a “reckless tax and spending spree.”
Mr. Biden’s allies note that part of governing is dealing with the unexpected, and they give him credit for managing the pandemic and pushing his agenda in a divided Congress.
“All presidents have to deal with these external factors that just careen into their presidency,” said Sen. Ed Markey (D., Mass.). “But on this big agenda which he has for infrastructure and for family, he’s right on pace.”
The White House continues to express optimism. White House senior adviser Anita Dunn briefed Democratic lawmakers Thursday about the president’s economic plans, with a slideshow that emphasized the administration’s arguments that the agenda will boost jobs and help working families, including polling data showing the popularity of the initiatives.
But the White House acknowledges the depth of Mr. Biden’s challenges. “He has a lot on his plate, and he is fully focused on all of it. And so we just keep pressing on,” senior adviser Mike Donilon said during a briefing call with reporters.
On vaccinations, the White House has been on the defensive in recent days as cases rise again after having fallen earlier in the year, and amid news of breakthrough infections at the White House and the Capitol. The country still hasn’t quite reached Mr. Biden’s goal, initially set for July 4, of reaching 70% of Americans with at least one dose of the Covid-19 vaccine. So far, over 68% of adults aged 18 and older have received one shot and nearly 60% have been fully vaccinated.
Mr. Biden has been asked repeatedly whether mask guidelines should be reconsidered. Some local governments have reimposed masking rules as the spread of the highly contagious Delta variant drives up cases in every state in the country.
Budget reconciliation may offer Democrats a way to sidestep some partisan gridlock and advance President Biden’s policy objectives. WSJ explains how the process works and why divisions in the party could scuttle the process. Photo Illustration: Carlos Waters / WSJ
The Wall Street Journal Interactive Edition
Before a meeting at the White House on Thursday, he said the administration would follow the scientific advice. He repeated his argument that the current situation is a “pandemic among the non-vaccinated,” adding that the vaccinated were protected against infection in most cases, and from serious illness if they do contract the virus.
Mr. Biden has also tussled with
over the social media company’s role in policing misinformation about Covid-19 and vaccines.
William Galston, a former aide to President Bill Clinton, said the president faced risks if he wasn’t able to meet his public goals.
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“Expectations have been raised,” he said. “If those expectations are dashed, my fear is there could be a reaction.”
White House officials have long said the pandemic and economy are intertwined, and success in vaccinations would bolster job growth. The president has delivered remarks at the start of each month to highlight the rebound in hiring—with employers adding an average of about 600,000 jobs a month since the start of his presidency.
But the turbulence and polls showing growing concern over inflation have prompted Mr. Biden to push back against critics who say his spending policies, and pursuit of tax increases, are the wrong economic prescription.
He has acknowledged inflation in the short term but asserted that it won’t be a long-term issue for Americans—a message that could become difficult to maintain if consumers continue to face higher prices in the coming months.
“People are paying more for everything—when they can get it. If there’s one thing Americans don’t like doing, it’s standing in lines and paying more for something,” said
a Virginia-based Republican strategist. Virginia holds a gubernatorial election in November that could serve as an early test of Mr. Biden’s political strength.
The White House views Mr. Biden’s legislative agenda as the best way to position Democrats in next year’s midterms. Mr. Biden notched an early victory with the passage of a $1.9 trillion Covid-19 relief law during his first 100 days and has used executive action to overturn many actions taken by former President Donald Trump.
Enacting the next major planks of his agenda rests on whether he can secure support for a roughly $1 trillion infrastructure package and a separate $3.5 trillion measure to fund projects to address climate change and provide access to education and affordable child care. Each will test Mr. Biden’s deal-making skills: The first package would need the support of at least 10 Republicans to advance in the Senate, while the second will require unanimous Democratic support to make it through the chamber.
Don’t be fooled – the UK economy is not having a rerun of the 1970s – The Guardian
UK Economy Faces $6.3 Billion Hit From Pingdemic, CEBR Says – BNN
The U.K.’s economy could face a loss of more than 4.6 billion pounds ($6.3 billions) in just four weeks if rules on self-isolation following a “ping” from the NHS app aren’t relaxed, according to data from Centre for Economics and Business Research.
Since July 19 “freedom day,” the surge of Covid cases in the U.K. implies has caused increasing number of people will need self-isolate after being contacted by the NHS app, triggering disruption in supply chains. Figures released this week from the NHS track-and-trace app, covering the period from July 8-14, show a record 607,486 self-isolation pings were sent within a week in England.
The government may need to speed up its overhaul of the NHS App, as exemptions introduced for key workers would reduce the overall cost by only 300 million pounds over the period, CEBR said, whereas more than half could be saved by relaxing isolation for those who have had their second vaccination by at least two weeks, they added.
Britain’s economy already showed signs of slowing in July as euphoria following the easing of coronavirus restrictions eased and a resurgence of the coronavirus caused widespread staff shortages. An index based on a survey of purchasing managers by IHS Markit fell unexpectedly to its lowest since March.
Meanwhile, London Mayor Sadiq Khan urged Boris Johnson’s government to relax isolation rules for vaccinated people who come into contact with a Covid-19 case, with the U.K. capital facing major disruption.
Politicians and scientists are now concerned that people are deleting the official Covid-19 mobile phone app, or at least switching off its tracing function, to avoid having to self-isolate.
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