Trudeau seems unperturbed as trouble brews on all sides
The Liberal election strategy would appear to boil down to this: sit tight, and hope there’s no recession
The prime minister was his usual insouciant self through the traditional round of year-end interviews: a shrug here, a smile there, with comments just ambiguous enough to justify each news organization’s decision to trumpet its own interview without actually committing his government to anything.
Yes, Justin Trudeau allowed to the CBC’s Rosemary Barton, he does want to “get rid of those steel and aluminum tariffs” Donald Trump imposed last spring, which remain in place even after the renegotiation of NAFTA. What was his plan? It was, he said, to “continue to engage with” like-minded groups in the U.S., “from members of Congress, from business or associations … from governors who also want to see these tariffs gone.” OK. Good luck with that.
Much the same pseudo-news emerged from interviews with CTV and Canadian Press. He’s trying, he told CTV, “to see if there is a way of no longer exporting” those armoured vehicles to Saudi Arabia that have caused his government such grief — or rather he’s still trying, since he’s said much the same before. The next election, he told CP, would indeed be next October, as prescribed by federal legislation.
He’d pass amendments to the Parliament of Canada Act in line with the changes he’s made to the Senate appointment process, a bit of housekeeping CP dressed up into a vow to “cement” the changes in a way that would make it “harder for a future prime minister to turn back the clock” — though if in fact it were made any harder than the mere passage of contrary legislation they would almost certainly be unconstitutional.
On a couple of matters, however, the prime minister was a little more revealing, intentionally or otherwise.
Asked by CTV’s Evan Solomon whether he’d be open to restarting the mothballed Energy East pipeline project, Trudeau at first dodged: there was no project to restart, he protested, the project’s sponsors having “walked away” from it.
But, Solomon persisted, couldn’t the government step in to “de-risk” the project, as it had with Trans Mountain?
“There is no support for a pipeline through Quebec,” was the prime minister’s blunt reply. You thought pipelines were a federal matter? You thought Trudeau’s professed willingness to push Trans Mountain through over B.C.’s objections had confirmed that? Think again. This is Quebec, after all.
What if the economy is not so strong as all that, come election time?
Even more revealing was Trudeau’s attempt to answer Solomon’s question on the deficit: by continuing to run $19-billion deficits in a strong economy, was he not leaving the government’s fiscal position exposed in the event the economy turned south?
“That’s not true,” he said, first citing the country’s triple-A rating with the credit agencies, then suggesting that, whatever level the debt might climb to, Canadians would “do better” for having more transit or flood infrastructure. Or something.
All in all, the interviews left the impression of a prime minister, and a government, that saw no reason for any major course corrections. This is, on the face of it, understandable. True, the Liberals are performing surprisingly weakly in the polls, given the state of the economy — just three points ahead of the opposition Conservatives, on average — but the party could be forgiven for believing the now-seasoned Trudeau will best the Conservatives’ Andrew Scheer in the campaign.
But this leaves to one side a rather important wildcard: what if the economy is not so strong as all that, come election time? Just as Liberal fiscal policy is essentially premised on the abolition of the business cycle, so Liberal election strategy would appear to boil down to this: sit tight, and hope there’s no recession.
Perhaps that’s all they can do. The economy is not the only factor in elections, but it’s a pretty decisive one: governing parties sometimes manage to lose even when the economy is expanding, but they almost never win when it’s contracting. And the risk factors for a recession, 10 years after the last, are piling up — as stock markets have been loudly pointing out for months. The S&P 500, for example, is down 13 per cent since September.
The economy is not the only factor in elections, but it’s a pretty decisive one
The U.S. remains the greatest source of worry. Notwithstanding the carnage in the markets, the Federal Reserve is expected to raise interest rates on Wednesday for the eighth time in three years, as it continues to withdraw the liquidity pumped into the economy during the financial crisis. How could it not? The U.S. government is now headed for deficits in the range of five per cent of GDP, even with unemployment below four per cent: that kind of pro-cyclicality is unheard of, and deeply destabilizing.
Now add to this the continuing threat of a trade war between the world’s two biggest economies, the U.S. and China; the looming prospect of the United Kingdom crashing out of the European Union on March 29, the deadline for a Brexit deal; the possibility of more Russian adventurism, even war, in Ukraine, as an increasingly unpopular Vladimir Putin casts about for a distraction; and, not least, the possible impeachment of a U.S. president — a traumatic event under any circumstances, never mind the incalculable risks presented by such an erratic and unstable character as Trump.
Not long ago the biggest threat to the Canadian economy, and Trudeau’s re-election chances, was thought to be U.S. abrogation of NAFTA. While that possibility has not altogether receded — Trump has told Congress of his intention to withdraw from the old agreement, leaving it the choice of the renegotiated deal or no deal at all — the Liberals may soon have reason to be nostalgic for those simpler times.
Categorised in: Canadian News