2020: The year of crazy politics – and frightening financial instability – we’d all like to forget about

Share on facebook
Share on twitter
Share on linkedin

2020 has been a rocky year for politics- an already contentious topic made even worse by the Covid-19 pandemic. An election year in the United States has served to add even more fuel to the proverbial fire- making things much more complex and polarized on a global scale.

In the Canadian political scene- it was just about a year ago at this time that Canadians went to the polls to give Prime Minister Justin Trudeau his second mandate as Prime Minister- although an albeit weaker mandate. Initially elected in 2015’s ‘red wave’- Trudeau had won a majority government (meaning that his Liberal Party controlled the majority of the seats in parliament- and therefore could get their own legislation passed much easier- without the need to consult with opposition parties). Last year’s election reduced Trudeau’s Liberals to a minority in parliament- which political analysts widely attributed to growing opposition to many of his policies- including the implementation of a carbon tax; and the controversial firing of Canada’s first Indigenous Attorney General for refusing to intervene in a criminal investigation into Quebec-based construction giant SNC Lavalin. Although hopes were initially high for Conservative leader Andrew Scheer- he had failed to warm up to nationwide voters (despite actually winning the popular vote in the election by more than 200,000 votes- a scenario parallel to Donald Trump’s losing the popular vote to Hillary Clinton in 2016 despite winning the most electoral votes- and thus the election.)

Fast-forward a year later- Canada has been ravaged by Covid-19- and Trudeau is still Prime Minister (although the Conservatives have a new leader in Erin O’Toole, who was elected in a virtual leadership contest held on August 24, 2020.) Trudeau has managed to hold on to his job- and his popularity among Canadians has actually seemed to improve (somewhat) since Covid first started. Trudeau and his government received wide praise for their handling of the pandemic; which has seen Canada run up a budgetary deficit exceeding $400 billion for this year alone- and a total national debt of over $1 TRILLION.

The government’s costliest financial programs included CERB (Canada Emergency Response Benefit)- which handed out $2,000 per month over a period of 7 months to workers who saw their incomes affected by Covid. CERB just expired at the end of September- and is now transitioning into several new spin-off benefits that include extended Employment Insurance; the CRB (Canada Recovery Benefit- which is a continuation of the $2,000 per month wage subsidy); and a subsidy for people providing care to family members afflicted with Covid. The second costliest benefit was CEWS (Canada Emergency Wage Subsidy)- which was paid directly to businesses and covered up to 75% of their employee’s wages- up to a maximum of $847 per week. CEWS was initially extended to December of this year- but recent political developments are now seeing CEWS extended by at least a year- into August 2021.

The recent political developments attributing to the benefit extensions began September 23 when Governor General Julie Payette delivered a Throne Speech- which outlines the government’s key priorities for the year ahead. As Trudeau’s Liberal government is currently in a minority setting- it would need to win over support from at least one of the other opposition parties in parliament in order to be able to continue governing. As the Throne Speech is a ‘confidence vote’; if the majority of parliament had rejected it and voted against it; the government would- by law- be forced to dissolve and Canadians would find themselves heading back to the polls a year after our last federal election- and in a pandemic to top it all off.

Desperate to avoid this scenario, the Liberals won support from the NDP (New Democratic Party)- on the condition that its key pandemic subsidies and benefits would be significantly extended. Initially, for example, the Canada Recovery Benefit was set to be $400 per week- but the NDP insisted it be increased to $500 a week (or the same $2000 a month that CERB was paying out) for another 26 weeks. The year-long extension of CEWS was also a key factor in NDP leader Jagmeet Singh deciding to prop up the Trudeau Liberals on the Throne Speech confidence vote- despite other parties like the Conservatives and Bloc Quebecois all voting against it.

It is quite obvious that the cost of staying in power will be around for generations to come- something Trudeau himself acknowledged in a recent address to the nation. As he explained, his government was taking advantage of record low interest rates and taking on debt on behalf of Canadians, so that citizens wouldn’t have to take on that debt for themselves. As Mr. Trudeau is well aware- the debt the government is taking on is with the taxpayers’ own money- and the 2021 fiscal year promises to look as bleak as 2020 has- with further deficits in the hundreds of billions of dollars seeming more plausible as the last days of 2020 go by- and as Canada heads into a winter fraught with Covid’s second wave; with case numbers now exceeding a record-setting 2,000 per day. Yves Giroux, Canada’s Parliamentary Budget Officer, has warned that the government’s current spending path is unsustainable- and cannot continue like it has for much longer without serious economic consequences- in the form of higher taxes and cuts to services. With anyone’s guess as to how long the second wave of Covid will remain with us- many Canadian taxpayers are nervous- and rightfully so- about the fiscal direction Prime Minister Trudeau is taking Canada in.

Even more uncertain is the current political situation south of the border- with America (still leading the world in Covid case counts at nearly 45,000 per day) heading to the polls in less than one month- in a contentious election between incumbent President Donald Trump and Democratic Nominee, former Vice President Joe Biden. With a controversial first debate that had pundits across the political spectrum proclaiming Americans as the debate’s loser- it is clear that this election will be harder-fought- and even nastier- than in 2016. President Trump and several members of his inner circle were themselves diagnosed with Covid last week- but the President is now reported to be in stable condition. At this point, America’s election could go either way (despite most polls seeing Biden ahead)- but the biggest impacts from the election will likely be felt globally- as America’s health, economic, and political issues at home continue to spill over and have residual effects in just about every country around the world. Whatever happens next shall be very interesting- and that is putting it mildly (and politely too- in our classically Canadian way)!