America’s presidential election is entering its closing stretch with the economy still stuck in a pandemic slump, and the candidates locked in a tight battle over the best way to pull it out.
The economy looked like a winner for President Donald Trump through most of his first term, with strong growth and unemployment declining. During the first months of the coronavirus recession, he maintained a polling lead on the issue. But lately there are signs that Democratic challenger Joe Biden is catching up.
Some of the policy gaps between the candidates are age-old: The Republican says he’ll cut taxes and red tape, while the Democrat promises to spend more. Others reflect contrasting approaches to new challenges like climate change and competition with China. And on a handful of issues, they broadly agree.There’s also been a big difference in presentation, with a slew of detailed policy proposals emerging from the Biden campaign, while Trump prefers to list promises in terse bullet-points.Whoever wins has a better-than-usual chance of actually implementing their proposals, because the pandemic has blown away old budget restraints, according to Mark Zandi, chief economist at Moody’s Analytics. “There’s a real good chance that a lot of them may become law.”
Here’s how the two candidates’ economic ideas stack up in some key areas.
Pandemic Recovery
The pandemic upended the nation’s longest economic expansion on record. In March and April alone, employers shed more than 22 million people from payrolls. The U.S. has recovered millions of jobs, but remains about 11.5 million short of pre-pandemic levels.
Trump has promised to create 10 million new jobs in 10 months, though both details and the precise time frame are fuzzy.
Meeting Trump’s goal may prove challenging. Permanent business closures have likely eliminated at least 5.5 million jobs, said Aneta Markowska, chief U.S. financial economist at Jefferies.
“Rebuilding those jobs is going to require new business formations or significant expansion by existing businesses, and that is just a process that takes time,” Markowska said.
Biden has promised to grow U.S. employment beyond pre-pandemic levels with a series of new government programs he calls “Build Back Better.” They include US$400 billion for manufacturing and $300 billion for research and development, which Biden says could create 5 million jobs on top of those lost to the coronavirus outbreak.
He has not attached a timeframe to his plan, though he would face pressure to achieve it by the end of his first term.
Tax and Spend
Fiscal policy may be the sharpest distinction between the candidates’ economic platforms. Trump has said he wants to build on tax cuts passed in his first term, while Biden has pledged to at least partly reverse them.The president says he’ll make the 2017 reductions to income and corporate taxes permanent (they’re currently due to expire in 2025), and his team has hinted at a “Tax Cuts 2.0” without giving much detail. Economic adviser Larry Kudlow has suggested there could be a reduction for the “middle class,” achieved by lowering the 22 per cent marginal rate of income tax to 15 per cent.
Trump deferred payroll taxes by executive order during the pandemic and says he’ll get Congress to turn that into a permanent write-off if re-elected.
Biden says he’ll undo half of Trump’s corporate tax cut by lifting the rate to 28 per cent from 21 per cent. He’s also told the wealthiest Americans that they should expect to pay more. Tax rates on income above US$400,000 would edge up to 39.6 per cent from 37 per cent.
The former vice president would also eliminate tax breaks for capital gains and dividends, and he plans to charge payroll taxes on incomes above US$400,000 (they currently only apply below US$137,700).On the outlays side of the budget, Trump — who funneled more cash to the Pentagon during his first term — has hinted he might look to slash spending in a second term, but has also promised to increase federal funding for law enforcement and infrastructure.
Biden’s promises include $2 trillion for a clean-energy overhaul and about US$1.5 trillion split between support for care for children and the elderly and for manufacturing.
‘Made in America’
The coronavirus recession hit service industries especially hard -– and highlighted the U.S. economy’s growing dependence on them, after the disappearance of manufacturing jobs since the 1990s. Both candidates have plans to bring the factories back – and both feature “Made in America” tax credits to encourage domestic investment.Trump’s team has floated the idea of halving the corporate rate to 10.5 per cent for firms that relocate to the U.S. The president is also proposing measures specifically tailored to companies repatriating jobs from China, as well as a 100 per cent expensing deduction in crucial industries like pharmaceuticals and robotics.
Biden would offer a 10 per cent tax credit for companies that reopen or renovate idled factories, or retool them to make priority goods like electric cars. The measure would also apply in industries where the U.S. competes with government-subsidized Chinese manufacturers, and would help cover relocation costs for companies that bring operations home.
Offshore Stick
In addition to carrots, both candidates plan to use sticks to reverse the outsourcing of production by U.S. companies to lower-wage countries like China, Vietnam and Mexico.
Trump has said he would prohibit federal contracts for companies that outsource to China, and impose tariffs on those that “desert America.”
Biden plans to impose a surcharge on profits made by U.S. firms that manufacture products overseas and sell them at home: they would pay a corporate tax rate of 30.8 per cent. He’d also phase out deductions and expensing write-offs for businesses that move overseas, and impose a 21% minimum tax on all foreign earnings.
Energy Jobs
Both Trump and Biden have identified the energy industry as a key sector for job creation. But their approaches couldn’t be more different.
Trump has said he will “continue to unleash American energy” by cutting more regulations – a follow-up to first-term policies that included approval of the Keystone XL pipeline and expansion of natural-gas export approval. He’s tried to paint Biden as an extreme environmentalist who would destroy energy-sector and automaking jobs.
Biden says his plan for US$2 trillion in clean-energy projects would create at least 10 million jobs –- including some in the auto industry, driven by a shift to electric cars. He’d also set up a “civilian climate corps” modeled on work-relief programs during the Great Depression.
The Democratic contender acknowledges that some existing energy jobs, such as those at coal mines and power plants that rely on the fossil fuel, would disappear -– and he’s pledged training and other support for the displaced workers.
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.
