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Why Politics Keeps Tanking a Bailout Idea that Works – POLITICO

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The last time the American economy tanked and Washington debated how to revive it, White House economists pushed one option that had never been tried in a big way: Send truckloads of federal dollars to the states.

When President Barack Obama took office in January 2009 during the throes of the Great Recession, tax revenues were collapsing and state budgets were hemorrhaging. The Obama team was terrified that without a massive infusion of cash from Congress, governors would tip the recession into a full-blown depression by laying off employees and cutting needed services. So the president proposed an unprecedented $200 billion in direct aid to states, a desperate effort to stop the bleeding that amounted to one fourth of his entire stimulus request.

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But the politics were dismal. Republican leaders had already decided to oppose any Obama stimulus. And even Washington Democrats who supported their new leader’s stimulus weren’t excited to help Republican governors balance their budgets. Most politicians enjoy spending money more than they enjoy giving money to other politicians to spend. And since state fiscal relief was a relatively new concept, the Obama team’s belief that it would provide powerful economic stimulus was more hunch-based than evidence-based.

Ultimately, the Democratic Congress approved $140 billion in state aid—only two thirds of Obama’s original ask, but far more than any previous stimulus.

And it worked. At least a dozen post-recession studies found state fiscal aid gave a significant boost to the economy—and that more state aid would have produced a stronger recovery. The Obama team’s hunch that helping states would help the nation turned out to be correct.

But evidence isn’t everything in Washington. Now that Congress is once again debating stimulus for a crushed economy—and governors are once again confronted with gigantic budget shortfalls—a partisan war is breaking out over state aid. Memories of 2009 have faded, and the politics have scrambled under a Republican presidential administration.

Democratic leaders have made state aid a top priority now that Donald Trump is in the White House, securing $150 billion for state, local and tribal governments in the CARES Act that Congress passed in March, and proposing an astonishing $915 billion in the HEROES Act that the House passed in May. Republican leaders accepted the fiscal relief in the March bill, but they kept it out of the last round of stimulus that Congress enacted in April, and they have declared the HEROES Act dead on arrival. Though they’re no longer denouncing stimulus as socialism, as they did in the Obama era, they’ve begun attacking state aid as a “blue-state bailout.”

Polls show that most voters want Washington to help states avoid layoffs of teachers, police officers and public health workers, but Senate Majority Leader Mitch McConnell, Fox News personalities, and other influential Republicans are trying to reframe state aid as big government Democratic welfare spending. President Donald Trump doesn’t want to run for reelection during a depression, and he initially suggested he supported state aid, but in recent weeks he has complained that it would just reward Democratic mismanagement.

“There wasn’t a lot of evidence that state aid would be good stimulus in 2009, but now there’s a lot of data, and it all adds up to juice for the economy,” says Moody’s chief economist Mark Zandi. “It’s baffling that this is getting caught up in politics. If states don’t get the support they need soon, they’ll eliminate millions of jobs and cut spending at the worst possible time.”

The coronavirus is ravaging state budgets even faster than the Great Recession did, drying up revenue from sales taxes and income taxes while ratcheting up demand for health and unemployment benefits. But as Utah Republican senator Mitt Romney pointed out earlier this month: “Blue states aren’t the only ones who are getting screwed.” Yes, California faces a $54 billion budget shortfall, and virus-ravaged blue states like New York and New Jersey are also confronting tides of red ink. But the Republican governors of Texas, Georgia and Ohio have also directed state agencies to prepare draconian spending cuts to close massive budget gaps.

Fiscal experts say the new Republican talking point that irresponsible states brought these problems on themselves with unbalanced budgets and out-of-control spending has little basis in reality. Unlike the federal government, which was running a trillion-dollar deficit even before the pandemic, every state except Vermont is required by law to balance its budget every year. State finances were unusually healthy before the crisis hit; overall, they had reserved 7.6 percent of their budgets in rainy day funds, up from 5 percent before the Great Recession.

But now, governors of both parties are now pivoting to austerity, which means more public employees applying for unemployment benefits, fewer state and local services in a time of need, and fewer dollars circulating in the economy as it begins to reopen. Federal Reserve chairman Jerome Powell, who has approved a plan to buy up to $500 billion worth of state and local government bonds to help ease their money problems, recently suggested that direct federal aid to states also “deserves a careful look,” which in Fed-speak qualifies as a desperate plea for congressional action.

Nevertheless, some Republicans who traditionally pushed to devolve power from the federal government to the states are now dismissing state aid as a bloated reward for liberal profligacy. Some fiscal conservatives have merely suggested that the nearly trillion-dollar pass-through to states, cities and tribes in the House HEROES bill is too generous given the uncertainties about the downturn’s trajectory. McConnell actually proposed that states in need should just declare bankruptcy, which is not even a legal option. Former Wisconsin Governor Scott Walker wrote a New York Times op-ed titled “Don’t Bail Out the States.” Sean Hannity told his Fox viewers that more fiscal relief would be a tax on “responsible residents of red states,” while Florida Senator (and former Governor) Rick Scott said it would “bail out liberal politicians in states like New York for their unwillingness to make tough and responsible choices.”

It was not so long ago that governors like Walker and Scott were burnishing their own reputations for fiscal responsibility with federal stimulus dollars. Obama’s American Recovery and Reinvestment Act was a bold experiment in using federal dollars to backstop states in an economic emergency, and its legacy hangs over the debate over today’s emergency.

***

By the time Obama won the 2008 election, the U.S. economy had already begun to collapse, and his aides had already given him a stimulus memo proposing a $25 billion “state growth fund.” The goal was anti-anti-stimulus: They wanted to prevent state spending cuts and tax hikes that would undo all the stimulus benefits of federal spending increases and tax cuts. The memo warned that states faced at least $100 billion in budget shortfalls, and that “state spending cuts will add to fiscal drag.” Cash-strapped states would also cut funding to local governments, accelerating the doom loop of public-sector layoffs and service reductions, pulling money out of the economy when government ought to be pouring money in.

The memo also warned that the fund might be caricatured as a bailout for irresponsible states and might run counter to the self-interest of politicians who enjoy dispensing largesse: “Congress may resist spending money that governors get credit for spending.” House Speaker Nancy Pelosi of California wasn’t keen on creating a slush fund for her state’s Republican governor, Arnold Schwarzenegger, and House Majority Whip James Clyburn of South Carolina was even more suspicious of his GOP governor, Mark Sanford, an outspoken opponent of all stimulus and most aid to the poor.

After President-elect Obama addressed a National Governors Association event in Philadelphia, Sanford and other conservative Republicans publicly declared that they didn’t want his handouts—and many congressional Democrats were inclined to grant their wish. Even Obama’s chief of staff, Rahm Emanuel, was worried about the politics of writing checks to governors who might run against Obama in 2012 on fiscal responsibility platforms.

There were plenty of studies suggesting that unemployment benefits and other aid to recession victims was good economic stimulus, because families in need tend to spend money once they get it, but there wasn’t much available research about aid to states. Congress had approved $20 billion in additional Medicaid payments to states in a 2003 stimulus package, but that aid had arrived much too late to make a measurable difference in the much milder 2001 recession.

Still, Obama’s economists speculated that state aid would have “reasonably large macroeconomic bang for the buck.” And the holes in state budgets were expanding at a scary pace, doubling in the first week after Obama’s election, increasing more than five-fold by Inauguration Day; Robert Greenstein of the Center on Budget and Policy Priorities remembers giving the Obama team frequent updates on state budget outlooks that seemed to deteriorate by the hour.

Obama ended up requesting $200 billion in state fiscal relief in the Recovery Act, eight times his team’s suggestion from November, 10 times more than Congress had authorized in 2003. Emanuel insisted on structuring the aid through increases in existing federal support for schools and Medicaid, rather than just sending states money, so it could be framed as saving the jobs of teachers and nurses. (One otherwise prescient memo by Obama economic aide Jason Furman suggested the unwieldy title of “Tax Increase and Teacher & Cop Layoff Prevention Fund.”) Republicans overwhelmingly opposed the entire stimulus, so Democrats dictated the contents, and they grudgingly agreed to most of their new president’s request for state bailouts.

“State aid was the part of the stimulus where Obama met the most resistance from Democrats,” Greenstein says. “It had such a huge price tag, and nobody loved it. But we can see how desperately it was needed.”

The Obama White House initially estimated that each dollar sent to states would generate $1.10 in economic activity, compared to $1.50 for aid to vulnerable families or infrastructure projects that had been considered the gold standard for emergency stimulus. But later work by Berkeley economist Gabriel Chodorow-Reich and others concluded the actual multiplier effect of the Medicaid assistance in the Recovery Act was as high as $2.00. In addition to preventing cuts in medical care for the poor, it saved or created about one job for every $25,000 of federal spending—and the help arrived much faster than even the most “shovel-ready” infrastructure projects, landing in state capitals just a week after the stimulus passed.

“There were at least a dozen papers written on the state aid, and the evidence is crystal clear that it helped,” says Furman, who is now an economics professor at Harvard. “Unfortunately, it was incredibly hard to get Congress to do more of it, and that hurt.”

After all the bluster about turning down Obama’s money, the only Republican governor who even tried to reject a large chunk of the federal stimulus was Sanford, who was overruled by his fellow Republicans in the South Carolina Legislature. Sarah Palin of Alaska did turn down some energy dollars, while Walker and Scott sent back aid for high-speed rail projects approved by their Democratic predecessors, but otherwise the governors all used the cash to help close their budget gaps. Bobby Jindal of Louisiana appeared at the ribbon-cutting for one Recovery Act project wielding a giant check with his own name on it. Rick Perry of Texas used stimulus dollars to renovate his governor’s mansion—which, in fairness, had been firebombed.

Nevertheless, the Recovery Act covered only about 25 percent of the state budget shortfalls, and Republican senators blocked or shrank Obama’s repeated efforts to send more money to states, forcing governors of both parties to impose austerity programs that slashed about 750,000 state and local government jobs. In 2010, 24 states laid off public employees, 35 cut funding for K-12 education, 37 cut prison spending, and 37 cut money for higher education, one reason for the sharp increases in student loan debt since then. In a recent academic review of fiscal stimulus during the Great Recession, Furman estimated that if state and local governments had merely followed their pattern in previous recessions, spending more to counteract the slowdown in the private sector, GDP growth would have been 0.5 percent higher every year from 2009 through 2013.

The Recovery Act helped turn GDP from negative to positive within four months of its passage, launching the longest period of uninterrupted job growth in U.S. history. But there’s a broad consensus among economists that austerity in the form of layoffs and reduced services at the state and local level worked against the stimulus spending at the federal level, weakening the recovery and making life harder for millions of families.

“The states would’ve made much bigger cuts without the Recovery Act, but they did make big cuts,” says Brian Sigritz, director of fiscal studies at the National Association of State Budget Officers. “We’re seeing similar reactions now, except the situation is even worse.”

***

It took a decade for state budgets to recover completely from the financial crisis. 2019 was the first year since the Great Recession that they grew faster than their historic average, and the first year in recent memory that no state had to make midyear cuts to get into balance. Rainy-day funds reached an all-time high.

And then the pandemic arrived.

The government sector shed nearly a million jobs in April alone, which is more jobs than it lost during the entire Great Recession. The fiscal carnage has not been limited to states like New York and New Jersey at the epicenter of the pandemic; oil-dependent states like Texas and tourism-dependent states like Florida have also seen revenues plummet. The bipartisan National Governors Association has asked Congress for $500 billion in state stabilization funds, warning that otherwise governors will be forced to make “drastic cuts to the programs we depend on to provide economic security, educational opportunities and public safety.”

So far, Congress has passed four coronavirus bills providing about $3.6 trillion in relief, including $200 billion in direct aid to state, local and tribal governments for Medicaid and other pandemic-related costs. Republican Governor Charlie Baker of Massachusetts says the aid has come in handy in fighting the virus—not only for providing health care and buying masks but for helping communities install plexiglass in consumer-facing offices and pay overtime to essential workers. Massachusetts had more than 10 percent of its expected tax revenues in its rainy-day fund before the crisis, but its revenues have dried up, putting tremendous pressure on the state as well as its 351 local governments.

“You don’t want states and locals to constrict when the rest of the economy is trying to take off,” Baker said. “So far, we’ve gotten close to what we need, but the question is what happens now, because no one knows what the world is going to look like in a few months.”

In the initial coronavirus bills, Democrats pushed for state aid, and Republicans relented. But in the most recent stimulus that Congress enacted, the $733 billion April package focused on small-business lending, Democrats pushed for state aid and Republicans refused. McConnell has said he’s open to another stimulus package, but he has ridiculed the $3 trillion Democratic HEROES Act as wildly excessive, and rejected its huge proposal for state relief as a bailout for irresponsible blue states with troubled pension funds. Sean Hannity expanded the critique, warning Fox viewers that they were being set up to help Democratic states pay off their “unfunded pensions, sanctuary state policies, massive entitlements, reckless spending on Green New Deal nonsense, and hundreds of millions of dollars of waste.”

In fact, the state with the most underfunded pension plan is McConnell’s Kentucky, which has just a third of the assets it needs to cover its obligations, even though it had unified Republican rule until a Democrat rode the pension crisis to the governor’s office last fall. In general, red states tend to be more dependent on federal largesse than blue states, which tend to pay more taxes to the federal government; an analysis by WalletHub found that 13 of the 15 most dependent states voted for Trump in 2016, with Kentucky ranking third.

Trump initially suggested state aid was “certainly the next thing we’re going to be discussing,” before embracing McConnell’s message that state bailouts would unfairly reward incompetent Democrats in states like California. But California’s finances were also in solid shape before the pandemic, with a $5 billion surplus announced earlier this year in addition to a record $17 billion socked away in its rainy-day fund. Some of the partisan arguments against state aid have been flagrantly hostile to economic evidence; Walker’s op-ed actually blamed the state budget shortfalls after the Great Recession on “the disappearance of federal stimulus funds,” rather than the recession itself, as if the stimulus funds somehow created the holes by failing to continue to plug them.

But plenty of Republican politicians support state aid, especially in states that need it the most. The GOP chairmen of Georgia’s appropriations committees recently asked their congressional delegation to support relief “to close the unprecedented gap in dollars required to maintain a conservative and lean government framework of services.” Some Republicans believe McConnell’s opposition to state fiscal relief is just a negotiating ploy, so he can claim he’s making a concession when it gets included in the next stimulus bill.

“Some aid to states is inevitable and necessary,” says Republican lobbyist Ed Rogers. “I suspect McConnell just wants to set a marker, and make sure aid to states doesn’t become aid to pension funds and public employee union coffers.”

That said, it’s not just Republican partisans who are skeptical of the Democratic push for nearly a trillion dollars in state and local aid. The current projections of state budget gaps range as high as $650 billion over the next two years, but some deficit hawks question whether it’s necessary to fill all of them before it’s clear how long the economic pain will last, and before the Fed has even begun its government bond-buying program. Maya MacGuineas, president of the Center for a Responsible Federal Budget, was already disgusted by the trillion-dollar deficits that Washington ran up before the pandemic, and while she says it makes sense to add to those deficits to prevent states from making the crisis worse with radical budget cuts, she doesn’t think federal taxpayers need to cater to every state-level request.

“We have a little time to catch our breath now, so we should make sure that we’re only getting states what they need,” MacGuineas says. “It’s not a moment to be padding the asks.”

Tom Lee, a Republican state senator and former Senate president, says it’s impossible to know how much help states will need without knowing how quickly the economy will reopen, whether there will be a second wave of infections, when Americans will return to their old travel habits, and at what point there will be treatment or a vaccine for the virus. More than three-quarters of Florida’s general revenue comes from sales taxes, so a lot depends on when Floridians start buying things again, and how much they’re willing to buy. Lee says it’s reasonable to expect Washington to help in an emergency, since the national government can print money and Florida can’t, but that the federal money store can’t be open indefinitely, since Florida’s finances were in much better shape than Washington’s before the emergency.

“No question, we need help, but we can’t expect the feds to make us whole,” Lee says. “We’re going to have to tighten our belts, too.”

That’s exactly what Keynesian economic stimulus is supposed to avoid: the contraction of public-sector spending at a time when private-sector spending has already shriveled. A recent poll by the liberal group Data for Progress found that 78 percent of Americans supported $1 trillion in federal aid to states so they can “avoid making deep cuts to government programs and services.”

But Obama White House veterans say they learned two related lessons from their experience with state fiscal relief: It’s better to get too much than not enough, and it’s unwise to assume you can get more later. Stimulus fatigue was real in 2009, and it seems to be returning to Washington. Republicans who spent much of the Obama era screaming about the federal deficit have embraced a free-spending culture of red ink under Trump, but lately they’re starting to talk more about slowing down—not only with state aid, but especially with state aid.

“We’ve already seen how state contraction can undo federal expansion,” Furman says. “This is the one part of the economy where we know exactly what needs to be done, and we don’t need to invent a brand new creative idea. But I worry that we’re not going to do it.”

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Politics Briefing: Premiers warn Ottawa against 'overreaching' and setting conditions on funding – The Globe and Mail

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3 hours ago

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April 20, 2024

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Hello,

Canada’s premiers and territorial leaders are pressing the federal government to refrain from overreaching into provincial and territorial jurisdictions, particularly in such areas as housing, health care and education.

“Every government should have the right to receive ongoing financial compensation representing their fair share. This includes provinces and territories that reserve the right to require unconditional federal funding,” Nova Scotia Premier Tim Houston, chair of the Council of the Federation, wrote in a letter today.

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Houston, speaking for the premiers and territorial leaders, warned the federal government against “overreaching into provincial and territorial jurisdiction.”

The premiers’ letter, available here, said this week’s federal budget provided an opportunity to promote affordability, increase productivity and invest in economic growth for Canada.

“However, to fully deliver for Canadians we must return to a cooperative approach, where governments work together so that the unique needs and priorities of Canadians are respected and responded to in the most efficient way possible.”

The letter comes as Prime Minister Justin Trudeau and his government have launched a housing program with billions of dollars available to provinces or municipalities ready to work with Ottawa, but conditions are attached.

In Victoria, Trudeau responded to the letter, defending federal action on issues of concern to Canadians

“I’d always rather work with provinces, but if we have to, I will go around them and be there for Canadians,” Trudeau told a news conference.

“I am unabashed about saying I am ambitious to solve problems for Canadians right across the country.”

Houston said the federal budget was announced after provinces and territories had released their respective budgets, with initiatives that will impact their spending plans.

“There was limited and inconsistent outreach from the federal government in advance to ensure priorities and objectives of [provinces and territories] were considered,” said the letter.

“Premiers are concerned that new federal programs, created without long-term funding commitments, will eventually be downloaded on provinces and territories, increasing the financial burdens borne by their taxpayers.”

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

Quebec follows Ottawa and raises amount of capital gains subject to tax: Ottawa announced increases in its budget Tuesday, and Quebec now says it will tax two-thirds rather than one-half of capital gains, which are profits made on the sale of assets. Story here.

Ottawa to force banks to identify carbon rebate by name in direct deposits: Environment Minister Steven Guilbeault says Canadian banks that refuse to identify the carbon rebate by name when doing direct deposits are forcing the government to change the law to make them do it.

New Brunswick man kidnapped in Congo, held for more than four months: Premier Blaine Higgs has sent a letter to Minister of Foreign Affairs Mélanie Joly urging Ottawa to redouble its efforts on behalf of Fredrick (Freddy) Wangabo Mwenengabo, a Canadian citizen born in Congo, who was kidnapped in the eastern city of Goma in December.

Dominic LeBlanc says he supports PM, but doesn’t deny report on organizing leadership bid: LeBlanc is a lifelong friend of Justin Trudeau. On Wednesday, The Globe and Mail reported that he held a meeting with a former Liberal cabinet minister to lay the groundwork for a leadership campaign should Mr. Trudeau step down. Story here.

‘To us, that border doesn’t exist’: Alaska Indigenous groups want a say in B.C. mining projects they fear could hurt their livelihoods. A border stands in the way – but they hope a Canadian court ruling strengthens the case for ignoring it.

Chinese ambassador ends his posting in Canada: Cong Peiwu, Beijing’s envoy to Ottawa since 2019 – through much of the strained ties between China and Canada – has informed the Department of Global Affairs and other diplomatic missions in the capital that he’s heading home, sources say.

Federal Addictions Minister to meet with B.C. counterpart as backlash continues on decriminalization: A statement from the office of Ya’ara Saks, the federal Minister for Mental Health and Addictions, said she would be meeting with B.C.’s Jennifer Whiteside next week to discuss fallout from the province’s drug policies, including decriminalization and safer supply. Story here.

Poilievre won’t commit to keeping new social programs like pharmacare: CBC reports that Conservative Leader Pierre Poilievre is depicting the government’s latest budget as a threat to the country’s future, and suggesting a number of new social programs will get a second look if he leads the next government.

TODAY’S POLITICAL QUOTES

“I really believe in capitalist democracy. I have lived in other systems actually and they’re pretty awful.” – Deputy Prime Minister and Finance Minister Chrystia Freeland, in Toronto, today at a news conference in a lab.

“Limp, wet and utterly useless, paper straws and Liberal governments are not worth the cost.” – Conservative MP Corey Tochor during Question Period today.

“That’s the price of Pierre” – NDP MP Peter Julian, in a statement today, referring to the implications of federal Conservative Leader Pierre Poilievre’s policies on pharmacare, dental care and support for corporations.

THIS AND THAT

Today in the Commons: Projected Order of Business at the House of Commons, April. 19, accessible here.

Deputy Prime Minister’s Day: Private meetings in Toronto, and Chrystia Freeland toured a research lab and discussed her budget’s impact on research labs.

Ministers on the Road: Members of the federal cabinet are out across Canada, holding events to emphasize aspects of the federal budget, including research funding. Crown-Indigenous Relations Minister Gary Anandasangaree, International Development Minister Ahmed Hussen and Filomena Tassi, Minister for the Federal Economic Development Agency for Southern Ontario, are in Hamilton. Employment Minister Randy Boissonnault, is in Saskatoon, with Labour Minister Seamus O’Regan. Health Minister Mark Holland is in the Ontario city of Waterloo, hosting an event at the University of Waterloo. Agriculture Minister Lawrence MacAulay highlighted student-research investments at the University of Prince Edward Island’s Canadian Centre for Climate Change and Adaptation in St. Peter’s Bay. Mental Health Minister Ya’ara Saks hosted an event at the University of Manitoba in Winnipeg. Justice Minister Minister Arif Virani made a research funding announcement at the University of Calgary.

Meanwhile, Foreign Affairs Minister Mélanie Joly, on the Italian island of Capri, attended the final day of the G7 Foreign Ministers’ Meeting.

In Ottawa: Governor-General Mary Simon participated in the unveiling of a heraldic badge granted to the Rainbow Veterans of Canada by the Canadian Heraldic Authority.

Commons Committee Highlights: Heather Jeffrey, president of the Public Health Agency of Canada, and Stephen Lucas, deputy health minister, were scheduled to appear before the afternoon special committee on the Canada-China relationship.

New member of intelligence committee: Darren Fisher, a Liberal MP from Nova Scotia, has been appointed to the National Security and Intelligence Committee of Parliamentarians, says the Office of the Prime Minister. The committee, created in 2017, includes MPs and Senators from various parties who review national-security and intelligence activities carried out by the government.

Unanimous consent: MPs have given unanimous consent to a motion on antisemitism advanced by Green Party Leader Elizabeth May, and, says a spokesperson for May, inspired by a May. 22 Globe and Mail editorial. The motion, given consent Thursday, read: “That the House unequivocally condemns antisemitism, and in particular rejects the idea that Jewish Canadians are responsible for the actions of the State of Israel.”

PRIME MINISTER’S DAY

Justin Trudeau, in Victoria, met with students to highlight federal budget measures, and made an announcement on budget measures related to Canadian research and education.

On Saturday, Trudeau was scheduled to meet at CFB Esquimalt Naval Base Headquarters with visiting Polish President Andrzej Duda, who is making stops in Vancouver, the Victoria area, and Edmonton through Monday.

LEADERS

Conservative Party Leader Pierre Poilievre participated in a fundraising event in the Southern Ontario town of Milton.

Green Party Leader Elizabeth May travelled to her B.C. riding of Saanich-Gulf Islands, and attended the Beacon Community Services Volunteer Long Service ceremony and luncheon.

NDP Leader Jagmeet Singh, in Richmond, B.C., joined food-service workers outside Vancouver International Airport who have recently voted for strike action.

No schedule released for Bloc Québécois Leader Yves-François Blanchet.

THE DECIBEL

On today’s Decibel podcast, Bill Curry, The Globe’s deputy Ottawa bureau chief, discusses the ArriveCan app and what was learned from Kristian Firth’s appearance at the House of Commons. Firth was the first person in over a century held in contempt of Parliament and ordered to answer MPs’ questions. His company, GC Strategies, was awarded millions of dollars to help develop the app. The Decibel is here.

OPINION

Reconciliation: How to build up an Indigenous economy

“Investigations from both media and government into the ArriveCan app have laid bare much rot at the heart of the federal government’s procurement. There have been concerns about how costs can balloon out of control, or how middlemen can pocket millions of dollars for doing little work. Another troubling thread has been the apparent exploitation of a program meant to support Indigenous businesses.” – The Globe and Mail Editorial Board

The foreign interference inquiry features a parade of senior Liberals protesting too much

“We are partway through the mandate of the Public Inquiry into Foreign Interference in Federal Electoral Processes and Democratic Institutions, a.k.a. the Foreign Interference Commission, which is to say we are all the way through the only part that matters. – Andrew Coyne.

Jewish students are being forced to weigh a new factor when choosing universities

“This time of year, Grade 12 students are making big decisions about what comes next. Parents’ Facebook feeds feature proud announcements about where their child will attend university in the fall. It’s lovely. But for Jewish parents, a new factor has entered into the mix: Where can we send our kids that will be safe?” –Marsha Lederman.

Danielle Smith’s Bill 18 is as cynical and nefarious as it gets

“Alberta Premier Danielle Smith must awaken each morning and think: what fresh havoc can I wreak today? What’s remarkable is that she continues to get away with just about ev–deologue on the loose, free to indulge her libertarian, Justin Trudeau-despising whims as she wishes. She gets away with it largely because conservative politicians in Alberta have trained the populace to despise Ottawa, too, or at least “liberal” Ottawa.” – Gary Mason.

Here’s what a ‘fairness for every generation’ budget would have actually included

“Canada’s “Fairness For Every Generation” budget was quite clearly designed to promote the perception of fairness, rather than its realization. It’s a marketing document, as federal budgets are, through which a government with a certain degree of gall can claim that “it would be irresponsible and unfair to pass on more debt to the next generations,” while also introducing $52.9-billion in new spending, with the cost to service the national debt ($54.1-billion) now surpassing health transfers to the provinces ($52.1-billion).” – 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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Iran news: Canada, G7 urge de-escalation after Israel strike – CTV News

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April 19, 2024

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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

Published

2 days ago

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April 18, 2024

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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.

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