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The return of austerity politics – Washington Post

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Here is a prediction that you can take to the bank. I’m not in the business of handicapping, but if anyone offers to bet against the following proposition, don’t just take the bet. Double down on it.

Should Joe Biden win the election, the moment he puts his hand on the Bible on Inauguration Day, the Republican Party will suddenly remember that there is nothing more threatening to America than budget deficits.

Note that I label this the return of austerity politics, not economics. Although garments will be rended and dire warnings will be made, this isn’t about the economics of debt. At one level, it’s about blocking Democratic priorities. At a deeper level, it’s about kneecapping a Biden presidency before it has a chance to take off. (Disclosure: I informally advise the Biden campaign.)

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This outcome must be avoided and not just because the evolving economics of fiscal debt — one of the most interesting, evolving and inherently progressive areas of economics — says so. The main reason the return of austerity politics must be resisted is its human cost.

The equation couldn’t be simpler: Austerity equals human suffering. And such suffering will not be equally distributed. It will fall on those most vulnerable to the coronavirus and the economic damage it has unleashed.

The new economics of public debt underscores the urgency of this equation. The old argument that public borrowing competes with private borrowing, leading to higher interest rates and slower growth, has lacked empirical support for decades. Right now, we have a historically huge budget deficit of 15 percent of GDP (over $3 trillion) and debt about the same size as the economy. Yet the yield on the 10-year Treasury bill is below 1 percent (its average since the 1960s is 6 percent). More to the point, because these are unusual economic times, interest rates on government debt have been uncorrelated to the magnitude of that debt for decades now, as I discussed in recent testimony on the topic.

In fact, this has been the case in most advanced economies, regardless of debt levels, with Japan as the most notable example (its public debt has long been multiples of its economy). One reason is that these economies have operated below capacity, with both low inflation and excess savings relative to investment putting downward pressure on rates. That dynamic has drawn central banks, like our Federal Reserve, into the mix, trying to close output gaps by aggressively holding down the benchmark rates they control.

Inequality also plays a role. When growth flows disproportionately to those who are already wealthy, they tend to save, not spend, marginal dollars relative to middle and lower-income households. This, too, has boosted savings and lowered interest rates, while restricting the spending and the living standards of lower-income families.

But whatever the reason, the fact of persistently low rates offers new opportunities for near-term relief to those who need it and longer-term public investment to meet the existential challenges we face right now, from climate change to racial injustice.

One strong piece of evidence for this contention of ample fiscal space is that the most recent Congressional Budget Office forecast of what it will cost the government to service its debt has gone down, not up, since its previous forecast. And that earlier forecast didn’t include that $3 trillion of new debt incurred to offset the pandemic. How can we have more debt yet pay less to service it? Lower rates, of course.

This doesn’t mean that deficits never matter. They do, not least because when we carry such high debt levels, we’re a lot more vulnerable to an unforeseen spike in interest rates. So piling on wasteful debt is as economically wrongheaded now as it has ever been, which is why the highly regressive, deficit-financed Trump tax cuts were such a mistake. This also implies that the suddenly hawkish Republicans will be guilty of two fiscal crimes: piling on bad debt while refusing to countenance good debt.

But isn’t bad and good debt in the eye of beholder? No, because good debt does three things that bad debt doesn’t: It promotes growth, relieves hardship and advances racial equity. Investing in affordable housing for racial victims of housing segregation: good debt. Cuts in capital gains taxes: bad debt. Enhanced benefits for the unemployed and nutritional support for the millions not able to meet this basic need: good. Tax breaks for profitable corporations: bad.

Still, even with low rates and the ensuing low debt service, it is essential to raise the necessary revenue to pay for permanent measures, such as lasting investments in clean energy, standing up an affordable child-care sector and providing universal pre-K and free college for those of limited means — all of which are Biden proposals. Especially as these programs are both growth- and equity-inducing, paying for them through deficit financing is better than not doing them at all, but to stop there would severely undercut their political sustainability.

Should the election outcome break our way, how can progressives achieve these goals in the face of the forthcoming fiscal flip?

First, we must ignore the phony caterwauling of the deficit chicken hawks. One rule to be aggressively enforced is that anyone who voted for the Trump tax cuts has zero credibility on deficits and should be summarily ignored, if not ridiculed.

Second, we must help politicians with austere muscle memory understand these new dynamics. Here again, that’s not just an economic argument; it’s a political one. If conservatives ignore austerity when they’re in power but Democrats embrace it when they take control, then conservatives will consistently meet the demands of their constituents in the donor class while Democrats consistently fail to meet the needs of their constituents.

That is a not just a recipe for facilitating reckless fiscal policy and wasteful debt. It’s also a recipe for losing progressive support and political power — something no Democrat should want.

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Iran news: Canada, G7 urge de-escalation after Israel strike – CTV News

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Canada called for “all parties” to de-escalate rising tensions in the Mideast following an apparent Israeli drone attack against Iran overnight.

G7 foreign ministers, including Canada’s, and the High Representative for the European Union released a public statement Friday morning. The statement condemned Iran’s “direct and unprecedented attack” on April 13, which saw Western allies intercept more than 100 bomb-carrying drones headed towards Israel, the G7 countries said.

Prior to the Iranian attack, a previous airstrike, widely blamed on Israel, destroyed Iran’s consulate in Syria, killing 12 people including two elite Iranian generals.

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“I join my G7 colleagues in urging all parties to work to prevent further escalation,” wrote Foreign Affairs Minister Melanie Joly in a post on X Friday.

More details to come.

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Politics Briefing: Labour leader targets Poilievre, calls him 'anti-worker politician' – The Globe and Mail

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Hello,

Pierre Poilievre is a fraud when it comes to empowering workers, says the president of Canada’s largest labour organization.

Bea Bruske, president of the Canadian Labour Congress, targeted the federal Conservative Leader in a speech in Ottawa today as members of the labour movement met to develop a strategic approach to the next federal election, scheduled for October, 2025.

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“Whatever he claims today, Mr. Poilievre has a consistent 20-year record as an anti-worker politician,” said Bruske, whose congress represents more than three million workers.

She rhetorically asked whether the former federal cabinet minister has ever walked a picket line, or supported laws to strengthen workers’ voices.

“Mr. Poilievre sure is fighting hard to get himself power, but he’s never fought for worker power,” she said.

“We must do everything in our power to expose Pierre Poilievre as the fraud that he is.”

The Conservative Leader, whose party is running ahead of its rivals in public-opinion polls, has declared himself a champion of “the common people,” and been courting the working class as he works to build support.

Mr. Poilievre’s office today pushed back on the arguments against him.

Sebastian Skamski, media-operations director, said Mr. Poilievre, unlike other federal leaders, is connecting with workers.

In a statement, Skamski said NDP Leader Jagmeet Singh has sold out working Canadians by co-operating with the federal Liberal government, whose policies have created challenges for Canadian workers with punishing taxes and inflation.

“Pierre Poilievre is the one listening and speaking to workers on shop floors and in union halls from coast to coast to coast,” said Mr. Skamski.

Prime Minister Justin Trudeau and Mr. Singh are scheduled to speak to the gathering today. Mr. Poilievre was not invited to speak.

Asked during a post-speech news conference about the Conservative Leader’s absence, Bruske said the gathering is focused on worker issues, and Poilievre’s record as an MP and in government shows he has voted against rights, benefits and wage increases for workers.

“We want to make inroads with politicians that will consistently stand up for workers, and consistently engage with us,” she said.

This is the daily Politics Briefing newsletter, written by Ian Bailey. It is available exclusively to our digital subscribers. If you’re reading this on the web, subscribers can sign up for the Politics newsletter and more than 20 others on our newsletter signup page. Have any feedback? Let us know what you think.

TODAY’S HEADLINES

Pierre Poilievre’s top adviser not yet contacted in Lobbying Commissioner probe: The federal Lobbying Commissioner has yet to be in touch with Jenni Byrne as the watchdog probes allegations of inappropriate lobbying by staff working both in Byrne’s firm and a second one operating out of her office.

Métis groups will trudge on toward self-government as bill faces another setback: Métis organizations in Ontario and Alberta say they’ll stay on the path toward self-government, despite the uncertain future of a contentious bill meant to do just that.

Liberals buck global trend in ‘doubling down’ on foreign aid, as sector urges G7 push: The federal government pledged in its budget this week to increase humanitarian aid by $150-million in the current fiscal year and $200-million the following year.

Former B.C. finance minister running for the federal Conservatives: Mike de Jong says he will look to represent the Conservatives in Abbotsford-South Langley, which is being created out of part of the Abbotsford riding now held by departing Tory MP Ed Fast.

Ottawa’s new EV tax credit raises hope of big new Honda investment: The proposed measure would provide companies with a 10-per-cent rebate on the costs of constructing new buildings to be used in the electric-vehicle supply chain. Story here.

Sophie Grégoire Trudeau embraces uncertainty in new memoir, Closer Together: “I’m a continuous, curious, emotional adventurer and explorer of life and relationships,” Grégoire Trudeau told The Globe and Mail during a recent interview. “I’ve always been curious and interested and fascinated by human contact.”

TODAY’S POLITICAL QUOTES

“Sometimes you’re in a situation. You just can’t win. You say one thing. You get one community upset. You say another. You get another community upset.” – Ontario Premier Doug Ford, at a news conference in Oakville today, commenting on the Ontario legislature Speaker banning the wearing in the House of the traditional keffiyeh scarf. Ford opposes the ban, but it was upheld after the news conference in the provincial legislature.

“No, I plan to be a candidate in the next election under Prime Minister Trudeau’s leadership. I’m very happy. I’m excited about that. I’m focused on the responsibilities he gave me. It’s a big job. I’m enjoying it and I’m optimistic that our team and the Prime Minister will make the case to Canadians as to why we should be re-elected.” – Public Safety Minister Dominic LeBlanc, before Question Period today, on whether he is interested in the federal Liberal leadership, and succeeding Justin Trudeau as prime minister.

THIS AND THAT

Today in the Commons: Projected Order of Business at the House of Commons, April. 18, accessible here.

Deputy Prime Minister’s Day: Private meetings in Burlington, Ont., then Chrystia Freeland toured a manufacturing facility, discussed the federal budget and took media questions. Freeland then travelled to Washington, D.C., for spring meetings of the International Monetary Fund and the World Bank Group. Freeland also attended a meeting of the Five Eyes Finance Ministers hosted by U.S. Treasury Secretary Janet Yellen, and held a Canada-Ukraine working dinner on mobilizing Russian assets in support of Ukraine.

Ministers on the Road: Foreign Affairs Minister Mélanie Joly is on the Italian island of Capri for the G7 foreign ministers’ meeting. Heritage Minister Pascale St-Onge, in the Quebec town of Farnham, made an economic announcement, then held a brief discussion with agricultural workers and took media questions. Privy Council President Harjit Sajjan made a federal budget announcement in the Ontario city of Welland. Families Minister Jenna Sudds made an economic announcement in the Ontario city of Belleville.

Commons Committee Highlights: Treasury Board President Anita Anand appeared before the public-accounts committee on the auditor-general’s report on the ArriveCan app, and Karen Hogan, Auditor-General of Canada, later appeared on government spending. Crown-Indigenous Relations Minister Gary Anandasangaree appears before the status-of-women committee on the Red Dress Alert. Competition Bureau Commissioner Matthew Boswell and Yves Giroux, the Parliamentary Budget Officer, appeared before the finance committee on Bill C-59. Former Prince Edward Island premier Robert Ghiz, now the president and chief executive officer of the Canadian Telecommunications Association, is among the witnesses appearing before the human-resources committee on Bill C-58, An act to amend the Canada Labour Code. Caroline Maynard, Canada’s Information Commissioner, appears before the access-to-information committee on government spending. Michel Patenaude, chief inspector at the Sûreté du Québec, appeared before the public-safety committee on car thefts in Canada.

In Ottawa: Governor-General Mary Simon presented the Governor-General’s Literary Awards during a ceremony at Rideau Hall, and, in the evening, was scheduled to speak at the 2024 Indspire Awards to honour Indigenous professionals and youth.

PRIME MINISTER’S DAY

Justin Trudeau met with Ottawa Mayor Mark Sutcliffe at city hall. Sutcliffe later said it was the first time a sitting prime minister has visited city hall for a meeting with the mayor. Later, Trudeau delivered remarks to a Canada council meeting of the Canadian Labour Congress.

LEADERS

Bloc Québécois Leader Yves-François Blanchet held a media scrum at the House of Commons ahead of Question Period.

Conservative Leader Pierre Poilievre attends a party fundraising event at a private residence in Mississauga.

Green Party Leader Elizabeth May attended the House of Commons.

NDP Leader Jagmeet Singh, in Ottawa, met with Saskatchewan’s NDP Leader, Carla Beck, and, later, Ken Price, the chief of the K’ómoks First Nation,. In the afternoon, he delivered a speech to a Canadian Labour Congress Canadian council meeting.

THE DECIBEL

On today’s edition of The Globe and Mail podcast, Sanjay Ruparelia, an associate professor at Toronto Metropolitan University and Jarislowsky Democracy Chair, explains why India’s elections matter for democracy – and the balance of power for the rest of the world. The Decibel is here.

PUBLIC OPINION

Declining trust in federal and provincial governments: A new survey finds a growing proportion of Canadians do not trust the federal or provincial governments to make decisions on health care, climate change, the economy and immigration.

OPINION

On Haida Gwaii, an island of change for Indigenous land talks

“For more than a century, the Haida Nation has disputed the Crown’s dominion over the land, air and waters of Haida Gwaii, a lush archipelago roughly 150 kilometres off the coast of British Columbia. More than 20 years ago, the First Nation went to the Supreme Court of Canada with a lawsuit that says the islands belong to the Haida, part of a wider legal and political effort to resolve scores of land claims in the province. That case has been grinding toward a conclusion that the B.C. government was increasingly convinced would end in a Haida victory.” – The Globe and Mail Editorial Board.

The RCMP raid the home of ArriveCan contractor as Parliament scolds

“The last time someone was called before the bar of the House of Commons to answer MPs’ inquiries, it was to demand that a man named R.C. Miller explain how his company got government contracts to supply lights, burners and bristle brushes for lighthouses. That was 1913. On Wednesday, Kristian Firth, the managing partner of GCStrategies, one of the key contractors on the federal government’s ArriveCan app, was called to answer MPs’ queries. Inside the Commons, it felt like something from another century.” – Campbell Clark

First Nations peoples have lost confidence in Thunder Bay’s police force

“Thunder Bay has become ground zero for human-rights violations against Indigenous Peoples in Canada. Too many sudden and suspicious deaths of Indigenous Peoples have not been investigated properly. There have been too many reports on what is wrong with policing in the city – including ones by former chair of the Truth and Reconciliation Commission Murray Sinclair and former Toronto Police board chair Alok Mukherjee, and another one called “Broken Trust,” in which the Office of the Independent Police Review Director said the Thunder Bay Police Service (TBPS) was guilty of “systemic racism” in 2018. – Tanya Talaga.

The failure of Canada’s health care system is a disgrace – and a deadly one

“What can be said about Canada’s health care system that hasn’t been said countless times over, as we watch more and more people suffer and die as they wait for baseline standards of care? Despite our delusions, we don’t have “world-class” health care, as our Prime Minister has said; we don’t even have universal health care. What we have is health care if you’re lucky, or well connected, or if you happen to have a heart attack on a day when your closest ER is merely overcapacity as usual, and not stuffed to the point of incapacitation.” – Robyn Urback.

Got a news tip that you’d like us to look into? E-mail us at tips@globeandmail.com. Need to share documents securely? Reach out via SecureDrop.

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GOP strategist reacts to Trump’s ‘unconventional’ request – CNN

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GOP strategist reacts to Trump’s ‘unconventional’ request

Donald Trump’s campaign is asking Republican candidates and committees using the former president’s name and likeness to fundraise to give at least 5% of what they raise to the campaign, according to a letter obtained by CNN. CNN’s Steve Contorno and Republican strategist Rina Shah weigh in.


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– Source:
CNN

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