Canada: The Obama effect
For many Americans, seeing a new president move into the White House has been a long time coming, but it’s not just people south of the 49th parallel excited about Barack Obama becoming the 44th president of the United States – many Canadians can’t wait to see a changing of the guard, too.
While Canucks are eager to see someone new take over for many of the same reasons Americans are, one issue in particular that Canadians want to see the incoming administration take early action on is the economy.
So, when Obama takes over will our economy finally pick up?
“The whole economic picture is so complex, but when the American economy starts to recover Canada’s economy will quickly follow suit,” says Doug Owram, deputy vice-chancellor of The University of British Columbia Okanagan and author of History of the Canadian Economy.
While many people are optimistic that Obama will bring some meaningful change to the White House and America’s economy, most know the country’s – and therefore Canada’s – financial fortunes won’t improve overnight. Richard Kelly, an economist at TD Bank, says the incoming president “won’t be able to snap his fingers and make the problems go away. It’s going to take some time.” But, he adds, “the sooner the U.S. economy can get moving, the better it will be for Canada.”
The new administration has been making moves aimed at helping the economy in the weeks leading up to the handover of power. On Jan. 15 the Democrats revealed an $825 billion stimulus bill that they hope Obama will be able to sign soon after he becomes president. While it’s expensive, it’s something that Owram believes the country needs. “He’ll want to put money into the economy and fast,” he says.
However, the overall U.S. economic picture is still worsening – consumer spending is down, the housing market keeps contracting, problems remain securing business loans – but if Obama acts right away, Kelly says, things should start looking better sooner than later. “There’s nothing Obama can do in the first half of this year, but he wants to ensure that there will be improvements in the second half so by 2010 the economy can start growing again.”
A major plus for the Canadian government in all this is that it will finally be able to see how America’s economic policy will look in the coming months. With Bush on his way out, and the incoming president trying to be proactive without stepping on his predecessors toes, until now, no one’s been able to say with certainty what Obama’s fiscal plans are. “For the last three months we’ve been waiting to see where America’s policy will be going forward,” says Kelly.
One priority the new government already has on their to-do list is to develop infrastructure on a level not seen in the U.S. since the 1950s. Canadian companies can hope that they will be enlisted to assist with some of these massive programs. “The U.S. buys a lot of Canadian goods, so if there’s additional spending in the States, it could trickle over to Canada,” says Renan Levine, an assistant professor of political science at the University of Toronto.
But it’s not just spending and stimulus packages that America’s offering the North American economy; it’s an attitude adjustment. It’s no secret that Bush’s popularity on the international stage was tepid at best, so a more inclusive president could help Canada’s economy simply by being open to new ideas. “Obama might be willing to listen to Canadian concerns around things like softwood lumber or the auto industry,” says Owram.
On the flipside, though, is Democrats’ history of being more protectionist than Republicans. During the primary campaign, Obama came under fire for saying he would renegotiate the North America Free Trade Agreement. And whether that’s true or was mere political posturing, it’s still an issue of which Owram believes the Canadian government needs to stay aware. “There are strong sentiments to put up tariff barriers, and put restrictions on outsourcing jobs,” says Owram. “Canada’s not a primary focus of that, but nonetheless the mood in Congress might not be as friendly to international trade.”
Another potential obstacle for economic progress between the two countries is Obama and Stephen Harper’s ideological differences. Owram points out that Harper’s views are more in line with Bush. “I don’t know if that will mean anything, but Conservatives will have to listen very carefully to a much more liberal administration,” he says. “In fact, Obama will be more liberal in instinct than he let on in the campaign.”
Hopefully, personality differences won’t be an issue, because it’s vital that the two countries work together to help turn North America’s fiscal outlook around. “Whatever happens, the trade relationship will be vital for Canada to manvouer through the recession,” says Owram. “We have to watch the American economy and Obama’s policies very closely.”