(Bloomberg) — President Joe Biden’s team and Democratic lawmakers are agonizing over the size and scope of his multi-trillion dollar economic plan, as Biden’s approval rating sags and upcoming elections threaten to show his party’s vulnerability.
Negotiations over the legislation — a package of social programs, tax increases and climate measures Biden calls “Build Back Better” — have dragged on for weeks. White House officials are trying to raise pressure for the talks to wrap up, according to one administration official.
Speaker Nancy Pelosi and Democratic centrists want to scale back the bill to focus on a handful of well-funded programs that can be quickly implemented, so Democrats can boast about the accomplishments in 2022 mid-term campaigns. But progressives want to keep the legislation expansive, even if programs are partially funded or expire after only a few years.
Senior White House aides recognize that Biden’s legacy is bound to the economic plan. The legislation would bring into law a number of his campaign promises, including ensuring greater racial equity, fighting climate change and helping women, seniors, children and working families. Without it, the president and his party will be open to criticism from Republicans that they’re unable to govern.
The political repercussions may be imminent. Virginia will elect a new governor on Nov. 2, and the contest, between former Democratic Governor Terry McAuliffe and Republican Glenn Youngkin, may foreshadow midterm congressional elections in 2022.
Polls show a tighter race than Democrats had hoped. First lady Jill Biden and former President Barack Obama plan to travel to the state this month to try to boost McAuliffe.
Only Chance
Many Democratic lawmakers, meanwhile, regard the “Build Back Better” legislation as their only chance to advance favored policies in a narrowly divided Congress, including climate and tax measures. Some have threatened to withhold their support unless their pet projects are included.
“The problem they have is getting 218 votes,” in the House, said Thomas Kahn, a former Democratic staff director of the House Budget Committee who now teaches at American University. “The way to get there is to offer everyone a little something.”
But he added that it’s “much better to have two, three or four programs that you really fund and get off the ground and can point to when the bill is enacted and say, for example, ‘I got you the child tax credit.”’
House and Senate Democratic leaders are split on whether to concentrate spending on a handful of programs and eliminate others entirely or enact the full menu of programs but only for a few years, setting up expiration dates in the not-too-distant future.
While Pelosi wants fewer programs, Senator Dick Durbin, the no. 2 Democratic leader, said he’s confident popular programs with short expiration dates would be renewed by future Congresses. Senate Finance Committee Chairman Ron Wyden told reporters he’d also “favor a shorter number of years” over eliminating programs.
One potential casualty of the negotiations is an expansion of Medicare, the health program for the elderly and disabled, that would add dental, vision and hearing benefits. The provision is favored by progressives, but at $350 billion over 10 years, it is one of the costliest pieces of the bill. Worse, the new benefits wouldn’t begin until 2028, providing little immediate political benefit.
But Senator Bernie Sanders, a Vermont independent, and some other liberals have called the Medicare expansion non-negotiable.
Senators have also discussed scaling back the bill’s child tax credit, viewed as an especially popular provision. Senator Mark Warner, a Virginia Democrat, has floated restricting the credit to people under an income threshold, while Senator Joe Manchin, a West Virginia Democrat, has suggested requiring parents to prove they’re employed to claim the tax break.
The House version of the bill would extend the credit through 2025 at an estimated cost of $556 billion. Biden allies say both the president and Pelosi are strong proponents of keeping the child tax credit intact.
Time for ‘Choices’
“There are choices that need to be made,” White House Press Secretary Jen Psaki said at a briefing this week. Biden’s view, she said, is that even a scaled-back bill “can still do something historic and that will fundamentally change — change the economy for the American people.”
Ultimately, Pelosi and Senate Majority Leader Chuck Schumer will likely have to combine paring back the cost of programs and cutting some altogether in order to appease both liberals in the House and the Senate’s two holdout centrists, Manchin and Kyrsten Sinema of Arizona.
The House-passed bill costs at least $3.5 trillion over a decade, while Manchin has said he won’t support more than $1.5 trillion. Biden has floated a range of about $2 trillion as a compromise.Representative Pramila Jayapal, who co-chairs the House Progressive Caucus, said that the left flank of the party is willing to negotiate, but largely prefers shorter expiration dates for programs rather than erasing them from the bill. “If we have to cut the numbers slightly, then we would reduce the number of years because the universality of benefits and the immediacy of benefits is absolutely critical,” Jayapal said. “Something we’re willing to look at is cutting back the years, say for example, on free community college.”
But she said that’s more difficult for programs with longer-term impact, such as measures to combat climate change. And reducing funding or expiration dates for some programs, such as paid family and medical leave or funding for child and senior care, could backfire. States and organizations responsible for implementing the programs might not bother if it’s uncertain the funding will continue.
“Pelosi has a very difficult job. I think she has to gather the things that are going to be the most dispositive, the most impactful, for the largest number of member votes,” said Chris Campbell, a former staff director for the Senate Finance Committee and former Treasury official. “There are going to be a lot of sleepless nights between now and December.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
