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Democrats have a chance to invest in economic growth for all after years of frustration – CNN

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That’s why President Joe Biden’s “Build Back Better” economic plan has so energized the White House, his party and outside allies. The new President and congressional Democratic majorities have a chance, finally, to make it happen.
The scale of his proposals reflects pent-up demand that years of thwarted ambition have produced. Actions to curb income inequality and boost middle-class wages were already at the center of Democratic debates before the last year brought them into even sharper relief.
“The pandemic just blew it all wide open,” observed Cecilia Rouse, who chairs Biden’s Council of Economic Advisers. “The opportunity cost of not doing anything has become extremely obvious.”
The $2.25 trillion American Jobs Plan Biden outlined last week was just the start. It invests in transportation, manufacturing, schools, broadband, water systems, care-giving services and energy transformation to curb climate change.
The comparably-priced American Family Plan coming later this month is at least as significant. Building “human capital” through investments that include universal early education represents a cornerstone of Democratic dreams of reducing poverty, increasing racial equity and fostering long-term prosperity.
“We have a tremendous amount of evidence, accumulated for years, that the basis for success in education and careers and high-productivity jobs is linked to what happens in the first five years,” said Laura D’Andrea Tyson, a University of California, Berkeley professor who chaired President Bill Clinton’s Council of Economic Advisers. “We’ve argued and argued. Finally, we have a moment in time in terms of popular support and Democratic control to do it.”
When Biden came of age after World War II, the federal government invested much more in components of economic growth than it does now. Money for President Dwight Eisenhower’s federal highway program, President John F. Kennedy’s space program, and President Lyndon Johnson’s Great Society swelled the part of the budget classified as investment — capital spending, research and development, and education and training — to more than 6% of the size of the entire economy.
But federal investment has trailed off since. The mammoth Social Security and Medicare retiree benefit programs — created by Franklin Roosevelt and Johnson, the transformative presidents Biden seeks to emulate — have consumed an increasing share of federal spending.
Meanwhile, the political ascendance of conservatives led by President Ronald Reagan squeezed the rest of the budget as they sought to discredit government, shrink it and cut taxes. The White House budget office projects this fiscal year as the tenth in a row, and 23rd of the last 25, with federal investment at levels half or less of its 1960s peak as a share of the economy.
Biden’s Democratic predecessors have struggled to resist the trend. Clinton made deficit reduction the hallmark of his first two years, then saw austerity-minded Republicans win control of Congress.
President Barack Obama enacted significant public investments in his 2009 stimulus responding to financial crisis and recession. But Republicans recaptured the House the next year, forced caps on spending, and blocked Obama’s requests for additional investments in infrastructure and early childhood education.

‘A tiny window of opportunity’

Democrats now dare to hope the pendulum has swung back in their direction. Before Biden defeated him, Donald Trump, too, emphasized the long-run economic struggles of what he called “the forgotten people.”
The disparate economic effects of the pandemic deepened and underscored the problem. Democrats say the robust fiscal response, including the $1,400 per person checks in Biden’s $1.9 trillion Covid-19 relief plan, has begun rebuilding long-lost trust in Washington.
“People are now seeing how government can be on their side,” said Sen. Sherrod Brown of Ohio. “That changes everything.”
But Biden risks losing Congress in 2022 just as Clinton and Obama did in the midterms following their elections. Assuming the chances of Republican cooperation are slim-to-none, Democratic allies invoke that possibility as a now-or-never rallying cry for the unity needed to pass his plan on their own.
“It’s a tiny window of opportunity,” tweeted Robert Reich, Clinton’s former labor secretary. “So be bold, damn it.”
Biden’s plan is nothing if not bold. In 2019, non-defense federal investments totaled $337 billion. If enacted, the White House proposals would more than double that for years.
The President redoubled his case Friday even while hailing strong job growth that brought March unemployment down to 6%. Rather than just fix immediate damage, he seeks to fundamentally upgrade key features of the economy.
As Rouse put it: “Sometimes you can repair the roof. Eventually you have to replace the roof.”
The difficulty of pushing through so much spending, and tax increases to finance it, will require intensive negotiations with Congress. Republican economists who acknowledge the potential of public investment warn the process of corralling votes can thwart it.
“It is a sound theory in principle,” observed Greg Mankiw, who chaired President George W. Bush’s Council of Economic Advisers and now teaches at Harvard. “The key question is whether, in practice, the political system succeeds in targeting investments with high return rather than producing ‘bridges to nowhere.'”
The return on Biden’s investments would take years to tally in any event. But he’ll enjoy one immediate political advantage if Congress delivers them.
Forecasters already predict the economy will surge over the next two years even without additional legislation. So voters will render their initial verdict on his agenda in the warm light of strong economic growth.

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CANADA STOCKS – TSX ends flat at 19,228.03

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* The Toronto Stock Exchange’s TSX falls 0.00 percent to 19,228.03

* Leading the index were Corus Entertainment Inc <CJRb.TO​>, up 7.0%, Methanex Corp​, up 6.4%, and Canaccord Genuity Group Inc​, higher by 5.5%.

* Lagging shares were Denison Mines Corp​​, down 7.0%, Trillium Therapeutics Inc​, down 7.0%, and Nexgen Energy Ltd​, lower by 5.7%.

* On the TSX 93 issues rose and 128 fell as a 0.7-to-1 ratio favored decliners. There were 26 new highs and no new lows, with total volume of 183.7 million shares.

* The most heavily traded shares by volume were Toronto-dominion Bank, Nutrien Ltd and Organigram Holdings Inc.

* The TSX’s energy group fell 1.61 points, or 1.4%, while the financials sector climbed 0.67 points, or 0.2%.

* West Texas Intermediate crude futures fell 0.44%, or $0.26, to $59.34 a barrel. Brent crude  fell 0.24%, or $0.15, to $63.05 [O/R]

* The TSX is up 10.3% for the year.

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Canadian dollar outshines G10 peers, boosted by jobs surge

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) – The Canadian dollar advanced against its broadly stronger U.S. counterpart on Friday as data showing the economy added far more jobs than expected in March offset lower oil prices, with the loonie also gaining for the week.

Canada added 303,100 jobs in March, triple analyst expectations, driven by the recovery across sectors hit by shutdowns in December and January to curb the new coronavirus.

“The Canadian economy keeps beating expectations,” said Michael Goshko, corporate risk manager at Western Union Business Solutions. “It seems like the economy is adapting to these closures and restrictions.”

Stronger-than-expected economic growth could pull forward the timing of the first interest rate hike by the Bank of Canada, Goshko said.

The central bank has signaled that its benchmark rate will stay at a record low of 0.25% until 2023. It is due to update its economic forecasts on April 21, when some analysts expect it to cut bond purchases.

The Canadian dollar was trading 0.3% higher at 1.2530 to the greenback, or 79.81 U.S. cents, the biggest gain among G10 currencies. For the week, it was also up 0.3%.

Still, speculators have cut their bullish bets on the Canadian dollar to the lowest since December, data from the U.S. Commodity Futures Trading Commission showed. As of April 6, net long positions had fallen to 2,690 contracts from 6,518 in the prior week.

The price of oil, one of Canada‘s major exports, was pressured by rising supplies from major producers. U.S. crude prices settled 0.5% lower at $59.32 a barrel, while the U.S. dollar gained ground against a basket of major currencies, supported by higher U.S. Treasury yields.

Canadian government bond yields also climbed and the curve steepened, with the 10-year up 4.1 basis points at 1.502%.

 

(Reporting by Fergal Smith; Editing by Andrea Ricci)

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Canadian dollar rebounds from one-week low ahead of jobs data

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Canadian dollar

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar strengthened against its U.S. counterpart on Thursday, recovering from a one-week low the day before, as the level of oil prices bolstered the medium-term outlook for the currency and ahead of domestic jobs data on Friday.

The Canadian dollar was trading 0.4% higher at 1.2560 to the greenback, or 79.62 U.S. cents. On Wednesday, it touched its weakest intraday level since March 31 at 1.2634.

“We have seen partial retracement from the decline over the last couple of days,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

“With oil prices where they are – let’s call WCS still at roughly $49 a barrel – I still think CAD has room to strengthen over the medium term and even over a one-week horizon.”

Western Canadian Select (WCS), the heavy blend of oil that Canada produces, trades at a discount to the U.S. benchmark. U.S. crude futures settled 0.3% lower at $59.60 a barrel, but were up nearly 80% since last November.

The S&P 500 closed at a record high as Treasury yields fell following softer-than-anticipated labor market data, while the U.S. dollar fell to a two-week low against a basket of major currencies.

Canada‘s employment report for March, due on Friday, could offer clues on the Bank of Canada‘s policy outlook. The central bank has become more upbeat about prospects for economic growth, while some strategists expect it to cut bond purchases at its next interest rate announcement on April 21.

On a more cautious note for the economy, Ontario, Canada‘s most populous province, initiated a four-week stay-at-home order as it battles a third wave of the COVID-19 pandemic.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year fell 3.3 basis points to 1.469%.

(Reporting by Fergal Smith;Editing by Alison Williams and Jonathan Oatis)

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