Economy

Impeachment will further obscure Trump's contested economic legacy – CBC.ca

Published

4 years ago

January 18, 2021

President Donald Trump claimed to support the little guy against the elite.

But after four years in power, examination of Donald Trump’s economic record in reaching that goal has been set aside as the impeachment fight moves on to the Senate.

Just as a new report by a U.S. business group shows Trump’s trade battles with China alone led to major job losses, there is a danger that as factions take sides over whether he did or did not incite an insurrection, the president’s economic successes and failures will be obscured.

There are still plenty in the U.S. financial sector who celebrate the tax cuts and low interest rates that propelled markets to new heights. But markets are not necessarily a good proxy for economic success, something repeatedly pointed out by Janet Yellen when she chaired the U.S. Federal Reserve.

“The stock market isn’t the economy,” said Yellen, who U.S. president-elect Joe Biden has said he will nominate as the first woman treasury secretary, in 2020. “The economy is production and jobs, and there are shortfalls in virtually every sector.”

That flawed relationship has certainly shown itself to be true over the past year as the COVID-19 pandemic overwhelmed the U.S. economy. Growth figures for the year, out later this month, are expected by economists to show U.S. GDP shrank by about three per cent even while the stock market finished the year at record highs.

Economic champions?

There is little doubt that Trump and his administration staked out their turf as champions of the economy. But some of the policies that they supported, including down-playing the impact of the virus to allow the economy to remain open, proved to be short-sighted.

While it is impossible to prove, many critics have said earlier acceptance of the pandemic’s dangers could have reduced the devastating effects of the pandemic not just on the record-setting death toll in the U.S., but on the economy as well.

One of the great successes of the Trump administration was on job growth. Despite their opponents’ objections to the post-Reagan conservative strategy of letting the economy rip at the expense of government planning and spending, unemployment rates repeatedly fell to new record lows.

Just before the pandemic came and swept it all away, wage rates for the lowest-paid workers were beginning to creep up. Yellen’s successor at the Fed, Jerome Powell, has said that as the poor suffered the most from COVID-19 job losses, it could be years before wages would start to rise again.

People line up in Kentucky in June 2020 to get help with COVID-19 jobless claims. Before the pandemic a major Trump success was low unemployment and early signs of rising wages. (Bryan Woolston/Reuters)

Failing to plan for the future is a good economic strategy if nothing goes wrong, but the arrival of COVID-19 was an example of why that is not a foolproof approach. Shortages of personal protective equipment, the weakening of the once-mighty U.S. Centers for Disease Control and Prevention, and failure to build a promised working replacement for Obamacare likely made the economic impact of the pandemic worse.

In this regard the U.S. was not alone. Canada had also let its guard down, including its failed reorganization of the country’s Global Public Health Intelligence Network, which has previously led the world as an early warning system for disease outbreaks.

Aversion to planning and failure to take expert advice can lead to short term advantages, like keeping costs down. But in areas such as climate change planning, many otherwise conservative business leaders have made the case for a long term economic benefit in leading the way on green measures. Now, under Biden, U.S. industry will be playing catch-up.

WATCH | Even pre-pandemic, there were holes in the U.S. economy (Feb. 2020):

U.S. President Donald Trump often points to the rising stock market when he claims responsibility for economic strength, but he doesn’t mention a lack of job growth or struggling sectors including manufacturing and coal. 2:19

Economics by populist appeal

Perhaps one of the biggest flaws in Trump’s economic strategy was that he chose policy based on how it would appeal to the ideology of his populist base. Sometimes things that appeal to a large number of people are simply wrong.

Immigration is one example. Blocking the arrival of highly skilled foreigners may sound like it is saving jobs for U.S. citizens, but the policy that helped Canada grab some of those people instead, is widely seen by labour economists as having the opposite effect.

Protectionism is another example. Trump’s attacks on Canada as a trade cheat may have played well to the Make America Great Again audience, but they were almost universally opposed by economists and U.S. businesses interested in making the economy stronger.

Tear gas is released into the crowd at the U.S. Capitol Building in Washington, D.C., on Jan. 6. An economy even more divided between rich and poor may actually hurt Trump supporters even while it inflames their political outrage with the current system. (Shannon Stapleton/Reuters)

Trump’s hard line on Canada and the renegotiation of NAFTA may have gained the U.S. some small advantages in the short term but also lost as much in good will. Wins and losses are hard to calculate, but last week Reuters reported on a study by U.S. businesses that showed Trump’s trade war with China, rather than bringing employment home, cost the economy 245,000 jobs.

Perhaps the biggest flaw in Trump’s economic strategy is the one that he celebrated as his biggest success: his $1.5-trillion overhaul of the U.S. tax system. While claiming to speak for poorer working Americans, it has been widely recorded that Trump’s financial support came from the rich who benefited from tax cuts and rising markets.

Especially after the impact of COVID-19, those measures have left the U.S. more starkly divided between rich and poor than when Trump took office.

Meanwhile, some of those who supported and benefited from Trump’s economic policy, including Senate Majority Leader Mitch McConnell, have now added their voices to the chorus criticizing the president.

Now, rather than taking a hard look at Trump’s economic policy, what went right and what went wrong, the impeachment may actually create even greater division.

Whether the Senate ultimately votes to convict Trump or not, the rising temperature of political outrage will make sober analysis next to impossible, with the danger of leaving the Trump presidency’s net benefit for the U.S. economy poorly examined.

Follow Don Pittis on Twitter @don_pittis

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Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

Published

2 days ago

September 10, 2024

Anne Joseph

VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

Published

2 days ago

September 10, 2024

Anne Joseph

NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

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Economy

Nova Scotia bill would kick-start offshore wind industry without approval from Ottawa

Published

3 days ago

September 10, 2024

Anne Joseph

HALIFAX – The Nova Scotia government has introduced a bill that would kick-start the province’s offshore wind industry without federal approval.

Natural Resources Minister Tory Rushton says amendments within a new omnibus bill introduced today will help ensure Nova Scotia meets its goal of launching a first call for offshore wind bids next year.

The province wants to offer project licences by 2030 to develop a total of five gigawatts of power from offshore wind.

Rushton says normally the province would wait for the federal government to adopt legislation establishing a wind industry off Canada’s East Coast, but that process has been “progressing slowly.”

Federal legislation that would enable the development of offshore wind farms in Nova Scotia and Newfoundland and Labrador has passed through the first and second reading in the Senate, and is currently under consideration in committee.

Rushton says the Nova Scotia bill mirrors the federal legislation and would prevent the province’s offshore wind industry from being held up in Ottawa.

This report by The Canadian Press was first published Sept. 10, 2024.

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