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Economy

Biden And Democrats Should Campaign On Economic Strength

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The midterm elections wind up on Tuesday, and several themes are front and center. Democrats are being criticized on the economy and for not sticking to a clear message. But they should be emphasizing Biden’s strong economic record, not running away from it.

As the election looms, some Democrats say the party has been running a “kitchen sink” approach, with scattershot messaging trying to appeal to narrow segments of the electorate. Strategists have feared continuing high inflation undercuts an economic message, so many have avoided talking about it.

At first glance, that makes sense. Polling shows many voters rank the economy as their top issue, and those “economy” voters seem heavily tilted to Republicans. A new CNN poll shows 51% of voters listing the economy as the top issue in their House vote. And among those voters ranking the economy highest, they break almost three-to-one in favor of Republican House candidates.

But some Democrats think the economy’s centrality is exactly why they need to fight on the issue. Michigan Democratic Representative Elissa Slotkin, in a tight re-election race, says “Democrats have done a poor job communicating our approach to the economy.” Without addressing pocketbook issues and Democratic policies, she argues “you’re just having half a conversation” with voters.

The White House has been waking up to this message problem. And they should—Biden’s economic record is very positive, inflation notwithstanding. Recently the President called attention to October’s jobs report, noting an additional 267,000 jobs, a big increase in manufacturing, and a “historically low” unemployment rate, including for Blacks and Hispanics.

Economic prosperity under Biden has been widely shared. Earlier this year, analysis showed economic gains going “to those in the bottom half of the income ladder, even before considering pandemic support.” And pandemic support, through Biden’s American Rescue Plan, helped protect around 90% of Americans from income losses relative to pre-pandemic incomes.

The USA also is doing much better than other countries. When you compare our real GDP percentage change to the pre-pandemic level, we’re up 3.5%, far ahead of Canada (1.7%), France (0.9%), Germany (-0.1%) and the United Kingdom (-0.2%).

Of course, Republicans are pounding away on continuing high inflation, blaming it on Biden’s policies. But many economists see inflation stemming from sources beyond Biden’s control.

Economist Mark Zandi regularly “decomposes” the inflation rate, and finds external factors, not Biden’s policies, account for most of our current inflation. Zandi’s most recent update finds 60% of inflation tied to “supply-side” factors, including Russia’s aggression against Ukraine, effects of the COVID-19 pandemic, and tight housing markets. In contrast, Zandi finds zero inflationary impact from Biden’s American Rescue Plan, energy regulation, and increases in the money supply, all factors that Republicans emphasize.

Do Republicans have plausible alternative economic policies? Not according to economists Laura Tyson and Teresa Ghilarducci. In a Project Syndicate article, they emphasize inflation is coming from energy and food prices driven by the war in Ukraine and continuing global supply chain problems. While gasoline prices capture media headlines, the two economists note “neither the President nor Congress can do much to reduce them in the short term.”

Tyson and Ghilarducci tell us Republican policies won’t produce lower inflation. Instead, Republicans would “pursue an agenda that would make life worse for most Americans.” They threaten to cut Social Security and Medicare benefits, reduce taxes on the wealthy, raise the price of prescription drugs, restrict abortion and other health care for women (which has negative economic consequences, detailed in an amicus curiae Supreme Court brief in the abortion battle) and implement other costly policies.

Most frighteningly, Republicans may endanger America’s financial credibility by refusing an increase in the federal debt limit. Several Republican House leaders have said they’ll use the debt limit as a bargaining chip to reduce Social Security and Medicare spending, which could trigger a default on Treasury bonds if they don’t relent. And threatening Treasury bonds and our financial stability would hurt the economy and perhaps trigger a global financial crisis.

With the election on Tuesday, it may be too late for Democrats to fight back on the economy, even while admitting the burden of high inflation. That could turn out to be a missed opportunity to highlight Biden’s strong economic growth and job creation.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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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.

The Canadian Press. All rights reserved.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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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.

The Canadian Press. All rights reserved.

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September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

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OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.

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