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Federal government poised to pile on more spending and debt

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Next week, the Trudeau government will release its fall fiscal update, which, considering the sorry state of federal finances, should demonstrate a newfound approach to spending and borrowing. But don’t hold your breath.

Although the Trudeau government describes itself as “fiscally responsible,” in reality it has a track record of unrestrained spending and large budget deficits. And it’s overseen the five highest years (2018 to 2022) of per-person program spending (adjusted for inflation) in Canadian history. Even excluding COVID-related spending, 2020 and 2021 remain the two highest years of per-person spending on record.

The Trudeau government has also run deficits every year since it took office in 2015—according to forecasts, this year’s deficit will eclipse $40 billion even though COVID is in the rearview mirror. Consequently, federal debt will have increased nearly $900 billion since 2014/15, up to $1.9 trillion for 2023/24.

While the prime minister and Finance Minister Chrystia Freeland often downplay the level of debt accumulation by noting that Canada has the lowest net debt-to-GDP ratio among the G7 countries (Germany, Italy, Japan, France, the United Kingdom and the United States), this is misleading.

Net debt is calculated as total (gross) debt minus all financial assets, with the implicit assumption that those assets could be used to offset debt. However, the Canada and Quebec Pension Plans (CPP and QPP) are included in the financial assets used to calculate net debt in Canada. But because CPP/QPP assets are needed for existing and future retirees, in reality they can’t be used to offset government debt.

Therefore, a better measure is gross debt, which measures all liabilities that require future payment of interest and/or principal by the debtor to the creditor. Compared to 29 other advanced economies, including the G7 countries, Canada’s gross debt as a share of the economy ranks 20th—meaning Canada is among the most indebted countries.

Clearly, the Trudeau government has been anything but fiscally responsible. And the current levels of spending and borrowing impose real costs on Canadians.

For example, since 2014/15 federal government debt interest costs have nearly doubled—reaching an estimated $43.9 billion, or 9.6 per cent of total revenues, for 2023/24. This means roughly one in every 10 dollars Ottawa collects from Canadian taxpayers this year will go towards debt interest costs, rather than government services or tax relief.

In light of these fiscal realities, if the Trudeau government wants to move anywhere close to a balanced budget in the foreseeable future, it must take meaningful steps in the upcoming fall fiscal update to restrain spending growth.

Unfortunately, this is unlikely to happen.

In a recent report, the Parliamentary Budget Officer (PBO) estimated that, due to spending increases, the federal government will run a deficit of $46.5 billion for 2023/24—$6.4 billion more than the government’s budget projections in March.

The government will also likely include new spending in the upcoming fiscal update meant to address housing and affordability. And will likely soon table legislation on national pharmacare, which the PBO estimates will cost $11.2 billion in 2024/25 alone.

Finally, not only does this unprecedented level of spending rack up mountains of debt, according to Bank of Canada Governor Tiff Macklem, “government spending is starting to get in the way of getting inflation back to target.” In other words, more spending by the federal government to address affordability concerns could actually worsen the problem by keeping inflation (and interest rates) higher than would otherwise be the case, eroding the purchasing power of Canadians.

While Ottawa’s fiscal situation demands a fiscally responsible fall fiscal update, it’s likely we’ll see much of the same next week from the Trudeau government—more spending and more borrowing.

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‘TERMINATED’: Trump Ends Trade Talks With Canada Over Premier Ford’s Ronald Reagan Ad Against Tariffs

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From the Daily Caller News Foundation

By Melissa O’Rourke

President Donald Trump announced late Thursday that trade negotiations with Canada “ARE HEREBY TERMINATED” after what he called “egregious behavior” tied to an Ontario TV ad that used former President Ronald Reagan’s voice to criticize tariffs.

The ad at the center of the feud was funded by Ontario Premier Doug Ford’s government as part of a multimillion-dollar campaign running on major U.S. networks. The spot features Reagan warning that tariffs may appear patriotic but ultimately “hurt every American worker and consumer.”

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“They only did this to interfere with the decision of the U.S. Supreme Court, and other courts. TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A,” Trump wrote on his Truth Social platform late Thursday. “Based on their egregious behavior, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED.”

Ford first posted the ad online on Oct. 16, writing in a caption, “Using every tool we have, we’ll never stop making the case against American tariffs on Canada. The way to prosperity is by working together.”

The Ronald Reagan Presidential Foundation and Institute criticized the ad Thursday evening, saying it “misrepresents” Reagan’s 1987 radio address on free and fair trade. The foundation said Ontario did not request permission to use or alter the recording and that it is reviewing its legal options.

The president posted early Friday that Canada “cheated and got caught,” adding that Reagan actually “loved tariffs for our country.”

The ad splices audio from Reagan’s original remarks but includes his authentic statement: “When someone says, ‘let’s impose tariffs on foreign imports’, it looks like they’re doing the patriotic thing by protecting American products and jobs. And sometimes, for a short while it works, but only for a short time.”

Reagan also noted at the end of his remarks that, in “certain select cases,” he had taken steps to stop unfair trade practices against American products and added that the president’s “options” in trade matters should not be restricted, which the ad did not include.

Since returning to the White House, Trump has imposed tariffs on Canadian aluminum, steel, automobiles and lumber, arguing they are vital to protecting U.S. manufacturing and national security.

The Supreme Court is set to hear arguments in November over whether the administration overstepped its authority by invoking the International Emergency Economic Powers Act to impose reciprocal tariffs on dozens of nations, including Canada. Tariffs on commodities such as steel, aluminum and copper were implemented under Section 232 of the Trade Expansion Act and are not currently being challenged, as they align with longstanding precedent established by prior administrations.

Thursday’s move marks the second time this year Trump has canceled trade talks with Ottawa. In June, he briefly halted discussions after Canada imposed a digital services tax on American tech firms, though the Canadian government repealed the measure two days later.

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A Middle Finger to Carney’s Elbows Up

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Benjamin J. Dichter's avatar Benjamin J. Dichter

Elbows Up Stengthens U.S. Tariff Resolve at Canada’s Expense

The disastrously misguided “Elbows Up” campaign championed by the Carney government rooted in the fantasy that a smug, arrogant Liberal elite wields leverage over the largest economy in human history, has suffered yet another devastating blow. The latest fallout: U.S.-based truck manufacturer Paccar Inc., maker of iconic heavyweights such as Kenworth and Peterbilt, is slashing Canadian production and laying off hundreds of workers in anticipation of a 25-per-cent U.S. import tariff set to take effect next month.

Employees at Paccar’s Sainte-Thérèse, Quebec plant were informed Wednesday that the company will move production of trucks destined for the U.S. market back to its American facilities. According to Daniel Cloutier, Quebec director for Unifor, approximately 300 jobs will be eliminated, leaving roughly 500 workers at the plant.

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“They will continue building trucks for the Canadian market,” Cloutier said, noting that domestic demand represents a much smaller portion of output. At its peak, the plant produced 96 trucks per day; production will now drop to just 18 units daily. That is an 81% drop.

Paccar declined to confirm the restructuring or provide additional details. However, in a financial earnings call a day earlier, CEO Preston Feight described the U.S. tariff policy as advantageous for the company. “I think it helps Paccar significantly,” Feight said. “It gives us a competitive leg up from where we’ve been.”

U.S. Tariffs Driving Industry Shift

U.S. President Donald Trump has confirmed that all medium and heavy-duty trucks imported into the United States will face a 25-per-cent tariff beginning Nov. 1, along with an additional 10-per-cent duty on buses. The tariffs are being imposed under Section 232 of the Trade Expansion Act, which targets imports deemed to pose a national security risk.

These measures follow earlier tariffs that have already struck Canadian steel, aluminum, automobiles, copper, and lumber, forcing companies to shelve investments and reconsider their North American strategies.

Broader Auto Sector Retrenchment

Other automakers are also pulling back production in Canada. General Motors announced Tuesday it is ending production of the Chevrolet BrightDrop electric delivery van in Ingersoll, Ontario, costing over 1,100 workers their jobs. Stellantis recently confirmed plans to shift production of the Jeep Compass from Brampton, Ontario, to Belvidere, Illinois, as part of a strategy to increase U.S. output by 50 per cent by 2029.

Quebec Plant at Risk

The Sainte-Thérèse plant, which manufactures Class 5, 6 and 7 Kenworth and Peterbilt trucks, has already endured two rounds of layoffs over the past year as uncertainty around tariffs weakened demand. At peak production, the facility employed over 1,400 people.

Cloutier said the union is pressing both the Quebec and federal governments to prioritize the purchase of domestically made vehicles to sustain production levels. Without such measures, he warned, the plant could be forced to close due to high fixed costs and insufficient volume. “Let’s not pretend global trade hasn’t changed with this President,” Cloutier said. “We need to stop twiddling our thumbs.”

Bus Manufacturers Also Exposed

Quebec is also home to two major bus manufacturers, Prevost and Nova Bus, both owned by Volvo Group that could face similar challenges due to new tariffs on buses entering the U.S. Executives at both companies say they are still assessing the impact of the policy shift.

What can we learn from all this?

Perhaps our deep reliance on American innovation has consequences we have been unwilling to confront. The warning signs were evident well before Donald Trump’s election. He was explicit that tariffs would be used as a strategic tool to financially incentivize American companies to return to the United States. This was not hidden, it was a core pillar of his economic agenda.

I have said repeatedly on the Marc Patrone Show on Sauga 960 that my frustration is not with America’s strategy, but with Canada’s political class. Their smug arrogance lies in the belief that, as great as Canada can be, we could somehow dominate the greatest economy in the history of civilization rather than work with it. The Trump administration never wanted Canada to become the 51st state; they want our valuable resources and are willing to pay fair value for them, and they expect Canada to finally take our internal security threats seriously; something I have personally presented on in the United States. Yet instead of leveraging our strategic position, Canada’s leadership chose performative resistance over pragmatic partnership.

The most telling moment came when President Trump reportedly asked Justin Trudeau what would happen if the United States imposed a 25-per-cent tariff on all Canadian goods. Trudeau’s response, “It would destroy Canada” was an example of catastrophic stupidity. It handed Trump the gun he could use to execute Canada economically and perhaps cost Canada its sovereignty over the long term.

Reminiscent of the scene from The Hunt for Red October, when Captain Tupolev, in an act of smug Laurentian style arrogance, fires a torpedo at Ramius only for it to circle back and destroy his own submarine, a catastrophic miscalculation born of arrogance and a complete misunderstanding of the enemy’s capabilities. A catastrophic miscalculation that mirrors Elbows Up stupidity.


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