Canadian Federal Politics Thread v5

[CliffFletcher]

Originally Posted by opendoor

Not to mention, people really need to look around the world if they think Canada's spending or deficits are out of control:

That second table is not as reassuring as we might hope.

The U.S. prints the fiat currency of global trade. Huge deficits are less of a problem for them than they are for other countries. But even with that advantage, they’re playing chicken with a fiscal crisis. The doomsday clock is ticking on the massive unfunded liability for social security and medicare.

Japan is a bizarre economy that doesn’t seem to behave like any other. And they’re not exactly an inspiring model. For the last three decades, they’ve averaged 1 per cent annual growth. Tourism to Japan is taking off is because it’s cheap. And it’s cheap because their economy and purchasing power are relentlessly declining.

So we’re left with the European G7 nations as fair comparisons. But these comparisons of % of GDP aren’t exactly apples to apples. Those countries have older populations than Canada, so we would expect them to have higher public spending per capita. They also pay higher taxes. Canadian voters have not demonstrated tolerance for tax regimes that their European counterparts live under (ie 20-25 per cent VAT). The argument that our deficits aren’t a big problem because we have lots of capacity to raise taxes isn’t very reassuring when the political reality on the ground means we’re unlikely to avail ourselves of that capacity.

I agree that Canada’s deficits are not ‘out of control.’ But they’re moving in the wrong direction. The feds made the mistake of running up increasing deficits when the economy was strong, and so were was wrong-footed when an unexpected catastrophe hit and government spending was needed. Government should tighten its belt in good times to afford the capacity to ramp up spending in bad. That’s Keynesian economics 101. But federal governments just can’t resist doling out money to bribe voters in good times and bad.

[Azure]

Originally Posted by chemgear

It's not really new information to be fair. The guy is just a peon (I mean all VP's are peons these days?) at Scotiabank but the Bank of Canada was pointing out the spending issue a long while back already.

With the backdrop of the upcoming budget looming and the likely shower of more new spending with the upcoming election, the Bank of Canada will have to bake in the all the additional spending into their adjustments. This is back in October.


https://globalnews.ca/news/10048805/...ing-inflation/

Pace of government spending ‘not helpful’ in efforts to tame inflation: Macklem

The Bank of Canada’s efforts to tame inflation by raising interest rates are at odds with the projected pace of government spending, says governor Tiff Macklem.

Macklem was asked what impact government spending plans are having on the path for inflation. He reiterated that fiscal policy is the purview of elected officials, and that the central bank’s role there is only to bake government spending plans into its forecast.

But citing the Bank of Canada’s latest outlook, Macklem said that based on the current spending plans in the budgets of all federal and provincial governments, fiscal spending is expected to grow at a rate of 2.5 per cent next year.

“So what that means is if all those spending plans are realized, government spending will be adding to demand more than supply is growing,” he said. “And in an environment where we’re trying to moderate spending, get inflation down — that’s not helpful.”

Macklem went on to urge fiscal policymakers to consider the “inflationary impact” of their spending decisions when making up their budgets.

“It’s going to be easier to get inflation down if monetary and fiscal policy are rowing in the same direction,” he said.

Yeah, but what about the election?

The budget will surely balance itself AFTER the election.

[CaptainCrunch]

The new defense policy dropped today.


Most of the spending has been kicked off down the road with 8.1 billion of the 73 billion being spent in the next 5 years, and the majority of that being spent after the next election.


https://www.ctvnews.ca/politics/cana...city-1.6837383

[Ironhorse]

Of course.

[opendoor]

Originally Posted by Firebot

A fair conclusion: Canada is in better shape than its G7 peers in terms of fiscal freedom, however high government spending is causing unnecessary inflationary pressure. Would you at least agree to this conclusion?

No, I wouldn't. For 2 reasons:

1) At 2.8%, inflation in Canada is currently within the target range, and that's with mortgage interest adding over 1 percentage point. The rolling average annualized inflation (seasonally adjusted) is clearly declining:

9-month: 3.2%
6-month: 1.5%
3-month: 1.2%

And again, that's with mortgage interest adding about a percentage point that that number. Outside of mortgage interest (and again, seasonally adjusted) there has been little to no inflation in the last 3-6 months.

Like I said, increasing commodity prices can (and likely will) reverse that trend, but that has little to do with internal Canadian policies, which is why core inflation measures are often preferred. So there aren't huge internal inflationary pressures right now to begin with.


2) Because government spending isn't inherently inflationary. It can be, but it depends what it's funding. To use 2 extreme examples, if the government had the Bank of Canada buy up a bunch of newly auctioned bonds and then they sent cash payments to everyone with that new money, that is clearly inflationary because you're adding a bunch of money out of thin air to the economy with no increase in the supply of goods/services. On the other hand, if the government had a bond auction that was bought by market participcants, and then used that money for foreign aid, that would be deflationary because you're removing money from the economy (much of the money to buy the bonds came from the money supply) without reducing the supply of goods/services.

Normal government spending exists within that spectrum. Some spending (or tax cuts) might add to inflationary pressures while others doesn't. On the whole, it doesn't tend to have much of an effect either way unless things get way out of whack. Simply put, the amounts we're talking about in Canada (a few tenths of a percent of GDP either way) where only some that may be inflationary aren't enough to really move the needle on inflation.

And a good way to see whether government policies are driving inflation is to look at money supply growth. If the government is inducing demand by introducing a bunch of new money into the economy through deficit spending, then that will show up in money supply growth (i.e. more money chasing the same goods/services). But that growth simply isn't happening in Canada right now. The money supply has grown at 3.5% in the last year and 3.8% the year before; that's the slowest growth since the 1990s and the 7th and 8th slowest growth years since WWII. Whereas in the high inflation period of the 1970s and early 1980s, about 15% was added to the money supply every year.

I guess my question would be, absent money supply growth, what mechanism do you suggest would be leading to the government creating inflation? I suppose you could argue that the velocity of the money stock is increasing (i.e. money changing hands more often), but by any measure I've seen, current M2 velocity is significantly below historical averages.


Beyond that, even if one did accept that government deficits were driving inflation, it doesn't necessarily follow that it's poor policy. If you read Macklem's comments from that same exchange where he was talking about rowing in different directions, he explains that the way lower government spending would reduce inflation is because it tends to result in lower economic growth, higher unemployment, and slower wage growth. So if inflation was the only thing that mattered, then it's easy, you just tank the economy, have a bunch of people lose their jobs, and voila, inflation solved. That might be good monetary policy (since it gets inflation down to 2%) which is what the Bank of Canada is concerned with, but it would be poor fiscal policy.

[undercoverbrother]

Originally Posted by CaptainCrunch

The new defense policy dropped today.


Most of the spending has been kicked off down the road with 8.1 billion of the 73 billion being spent in the next 5 years, and the majority of that being spent after the next election.


https://www.ctvnews.ca/politics/cana...city-1.6837383

That money is never coming the can will always be kicked down the road

[aaronck]

Originally Posted by Azure

Yeah, but what about the election?

The budget will surely balance itself AFTER the election.

I'm sure it won't, no matter who is voted in. All Albertans are waiting for the UCP to "fix" everything they promised are hung out to dry, and being sidetracked by all the #### that didn't come up during the election cycle- APP, Alberta Police, bans on renewables, AHS upheaval.

But oh no Carbon Tax!

[CaptainCrunch]

Originally Posted by Ironhorse

Of course.

Same thing that Trudeau did in 2017 when he rolled out his defence policy with a bunch of flashy spending for way down the road, and not surprisingly none of it was carried through with.


By the time this spending happens, the Forces will likely be completely non functional, or the requirements will have dramatically changed.

[CaptainCrunch]

Originally Posted by undercoverbrother

That money is never coming the can will always be kicked down the road

Yup, its 2017 all over again, same MO.


And by 2044 for example we'll be about 9 years into the F-35 and who knows what functionality block changes will cost by then.


Or those submarines etc will have massive requirement changes.



The problem is the right now. With recruiting way down, retention in the toilet. Half of our airforce and navy nonfunctional. Severe supply change and logistical issues. This needed to literally be front loaded just to ensure that we have an armed forces that can be transitioned.

[cral12]

when local conservative politicians try to be funny...

https://twitter.com/user/status/1777139348934169058

in response to:

https://twitter.com/user/status/1777088558328852944

[TKB]

Originally Posted by aaronck

I'm sure it won't, no matter who is voted in. All Albertans are waiting for the UCP to "fix" everything they promised are hung out to dry, and being sidetracked by all the #### that didn't come up during the election cycle- APP, Alberta Police, bans on renewables, AHS upheaval.

But oh no Carbon Tax!

I thought I was in the federal thread…

[Fuzz]

Originally Posted by cral12

when local conservative politicians try to be funny...

https://twitter.com/user/status/1777139348934169058

in response to:

https://twitter.com/user/status/1777088558328852944

Strangely enough, the only politician that represents me without embarrassment is at the provincial level. Thanks Len, I actually thought you were above this tripe. I guess not!

[CaptainCrunch]

Pretty interesting day with the foreign interference investigation.



More confirmation that the PMO was briefed on 11 candidates and 13 staffers receiving $250,000 dollars from the PRC. So the PM's story that he was never briefed is pretty suspicious. Either the PMO knew and didn't do their jobs to brief him which means that its gross incompetence. Or the PM was briefed and lied about knowing.





Also more disclosure on the Buffalo Chronicle story of the PM's past being ordered to be taken down (and it should have been). But at the same time damaging phony information was spread through Chinese channels against conservatives in some contested ridings and it was ignored.


Trudeau is testifying in front of the committee I think on Wednesday, however there is no taking an oath component here, so I doubt we get any information from him.


Also as soon as they received these reports with dollar figures attached from China, this should have become a criminal investigation as last I checked accepting money as a government official is a felony.

[timun]

Originally Posted by CaptainCrunch

More confirmation that the PMO was briefed on 11 candidates and 13 staffers receiving $250,000 dollars from the PRC. So the PM's story that he was never briefed is pretty suspicious. Either the PMO knew and didn't do their jobs to brief him which means that its gross incompetence. Or the PM was briefed and lied about knowing.

You're missing the context of the report entirely (which amusingly I found in a retweet from a Rebel Media video on Twitter):

Spoiler!

It was a briefing to the PMO in February of 2023 summarizing the media reports of foreign interference, i.e. the stuff that was already public.

The report doesn't say that "11 candidates and 13 staffers received $250,000 from the PRC", it says "at least 11 candidates and 13 staffers were implicated in PRC foreign interference networks [...]. This includes members of multiple political parties," and then a separate point it made that "reporting also suggests that, on at least one occasion, the PRC transferred approximately $250,000 to the staff member of a 2019 federal election candidate, and then to an Ontario MPP." But this is nothing new: this is what Global and the Globe and Mail reported on long, long ago. This is just a summary of what had already been published by the media, over a year ago!

Spoiler!

And for ####'s sake we don't have felonies in Canada.

[calgarygeologist]

Originally Posted by CaptainCrunch

Either the PMO knew and didn't do their jobs to brief him which means that its gross incompetence. Or the PM was briefed and lied about knowing.

I don't know about gross incompetence but we've heard this same pattern of events quite a bit during Trudeau's time as PM. There seems to be a lot of information that never gets transferred from the PMI and the PM. It looks to me like the PM is really just a puppet and there is a lot going on behind the scenes that he doesn't know about and doesn't care about.

[Baron von Kriterium]

Originally Posted by CaptainCrunch

The new defense policy dropped today.


Most of the spending has been kicked off down the road with 8.1 billion of the 73 billion being spent in the next 5 years, and the majority of that being spent after the next election.


https://www.ctvnews.ca/politics/cana...city-1.6837383

A lot of "we will explore" and not much "we will acquire." They didn't kick the can down the road; they punted it into orbit.

[curves2000]

Either PM Trudeau is NEVER advised on virtually anything of importance or of material impact or the conspiracy theorists are correct, he's a puppet and everybody else is pulling the strings!!

Perhaps he would lie to the public about the answer to 3+3.

[The Fonz]

3+3=7

[CliffFletcher]

Originally Posted by curves2000

Either PM Trudeau is NEVER advised on virtually anything of importance or of material impact or the conspiracy theorists are correct, he's a puppet and everybody else is pulling the strings!!

Perhaps he would lie to the public about the answer to 3+3.

I doubt he was in the loop about this stuff. Politicians broadly fall into two categories - the policy wonk and the salesman. Trudeau is the latter. His job is to sell a party and a platform. Speak well in front of cameras. Inspire loyalty. His advisors and party bigwigs craft the policy. He’s shielded from questionable stuff by those same advisors so he can maintain plausible deniability.

Another example of this type of politician was Ralph Klein. His job was to channel the vibes of the people at the St. Louis Hotel and bingo halls. He left policy up to Rod Love and PC party wonks.

It’s not a conspiracy, that’s just how politics works.

[Azure]

Which of course is extremely concerning because we don't necessarily elect the people driving policy.