THE WEST BLOCK
Episode 8, Season 12
Sunday, November 6, 2022
Host: Mercedes Stephenson
Chrystia Freeland, Deputy Prime Minister and Finance Minister
David Frum, The Atlantic
Location: Ottawa, ON
Mercedes Stephenson: Troubling times ahead for the Canadian economy. Can the finance minister strike the right balance?
And American voters head to the polls in the midterm elections. Is the future of U.S. democracy on the ballot?
I’m Mercedes Stephenson. Welcome to The West Block.
Ottawa’s fall fiscal update points to a looming economic slowdown. What will that mean for Canadians already struggling under rising interest rates and high inflation? We’ll ask Finance Minister Chrystia Freeland.
And a polarized nation heads to the polls. What’s at stake in the U.S. midterm elections and what will it mean for Canada?
Rising interest rates and the cost of living are hitting Canadians hard, and Ottawa says it may not get better any time soon.
Last week, Finance Minister Chrystia Freeland released the government’s outlook on the state of the economy. Economic growth is expected to slow down and the government didn’t rule out the possibility of a recession early next year.
For more on what Ottawa is doing to help Canadians through tough economic times, I’m joined now by Deputy Prime Minister and Finance Minister Chrystia Freeland. Thank you so much for joining us, Deputy Prime Minister.
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Great to be with you, Mercedes.
Mercedes Stephenson: You know it is a really challenging time for so many Canadians. I was reading an article that said the average Ottawa family is paying $1,088 for groceries a month. That’s a family of four. That’s a lot of money. Folks are worried that all the experts are saying it looks like the economic outlook could get worse before it gets better. What are the chances, you think, that we slide into recession?
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Well, first of all, on the grocery point, that is a lot of money and that is not a surprise to anyone who has gone grocery shopping recently. I think everyone in Canada’s feeling the pinch and the most vulnerable Canadians the most. So there is some good news and that is that on Friday, our GST cheques went out to Canadians. That is nearly $500 for a family and, you know, you’ve just said it was $1,088 for a family of four in Ottawa.
Mercedes Stephenson: Mm-hmm.
Chrystia Freeland, Deputy Prime Minister and Finance Minister: So it’s not going to cover everything, but $500 for that family is going to cover half of their grocery bill in November and that’s going to help. And I’m glad that we’re able to do that.
In terms of the economic outlook, in the fall economic statement, which we presented on Thursday, we put forward a baseline scenario that was based on the forecasts of the average of private sector economists. And in that scenario, we see a soft landing for Canada, but there—you know, since then, we did that at the end of September—some people have been saying you know, the economic weather is looking a little bit rougher in the global economy and so we put forward also a more pessimistic scenario, really to kind of stress test the federal government finances. And the good news is that even in that more pessimistic scenario, Canada comes out okay, just fine. We’re taking a fiscally responsible set of decisions, to ensure that come what may we have the fiscal firepower to support Canadians.
Mercedes Stephenson: There are a lot of folks who are feeling that pressure, that squeeze on their wallet. They’re having to make decisions about what they can and can’t buy. They’re having to go without and it’s tough. And they’re looking at the federal government and they’re paying a lot of taxes. They’re seeing Pierre Poilievre stand up in the House and saying well why don’t you just cut some taxes? Why don’t you cut the carbon tax? Why don’t you cut back on how much government income there is? Why is it that your government isn’t open to the idea of cutting taxes or perhaps pausing things like the CPP premiums?
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Well, we saw a couple of weeks ago what happens when a hard right government decides that the solution to a challenging global economy is just to slash and burn. And that’s what we saw with Liz Truss in the U.K. and the outcome wasn’t pretty. We saw the pound plummeting. We saw British pension funds on the brink of collapsing and the Bank of England had to step in to save the British economy. Now we are not going to do that in Canada. We believe in charting a fiscally responsible course. That is what we’re doing. And I do want to say specifically on the CPP and also on EI, we are not going to let anyone attack and deplete these programs. Right now, I agree with you, the economic environment is uncertain and that is precisely the time when we need our social safety net the most, when Canadians need the security of EI and the CPP and we are going to defend that.
Mercedes Stephenson: If pausing those programs, income or cutting taxes in the short-term is not on the table, is your government open to reviewing programs, looking for wasteful spending? Federal government is huge. I can’t recall the last time I saw a program review from your government looking for places where maybe there are programs that aren’t relevant.
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Well we did announce some measures, actually in the budget in April. We said in April that we were going to look to find $9 billion in savings in the federal budget. $3 billion of those were supposed to come from a review of COVID-related costs and an additional $6 billion just looking exactly, as you suggest, Mercedes, that, you know, are there things that we don’t need to do anymore? And the $3 billion was supposed to happen now, and actually in the fall economic statement that I tabled on Thursday, I said, you know what? We found more than $3 billion. We found $3.8 billion. So we’ve done that portion. There’s $6 billion more to go. Mona Fortier, our president of the treasury Board, is working on that because, like I agree with your basic premise, Mercedes, I think that things are really challenging for Canadian families and I think Canadian families are looking really closely at all of their expenses. I, personally, as a mother and wife, look carefully at my credit card bill once a month and last Sunday I said to the kids, you’re older now. You don’t want to watch Disney anymore, let’s cut that Disney+ subscription. So we cut it. It’s only $13.99 a month that we’re saving, but every little bit helps. And I think every mother in Canada is doing that right now. And I want to say to all of those mothers, I believe that I need to take exactly the same approach with the federal government’s finances because that’s the money of Canadians. So yeah, I think we do—we need to spend—we need to spend to support Canadians. We need to spend to invest in growth, like investing in the green transition. But you’re right, we need to do it carefully and that’s what we’re going to do. And Mona is going to find that $6 billion in savings.
Mercedes Stephenson: You mentioned the green transition. It was interesting because we were talking to Ian Bremmer from Eurasia Group recently on the show and he said that he thinks Justin Trudeau is going to have to backtrack essentially on some of his environment process—promises and to bump up oil and gas because of what’s happening with Russia and what’s happening with Ukraine. I know that’s very dear to your heart. He pointed out that the Green Party in Germany is now supporting the importation of fracked energy. He said he never thought he’d see that. Are you looking at your policies towards Canadian oil and gas companies differently and perhaps taking more of a carrot than a stick approach in terms of trying to get emissions down and supporting those exports when we’re facing a global energy shortage that’s being induced by Russia?
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Okay, lots of questions in there. Let me start by saying I do agree that there is an energy crisis in the world, created by Vladimir Putin, who is weaponizing oil and gas. He wants to cause tremendous pain to Europe in particular and get the West to back down and it’s not going to work. I try to watch every night before I go to sleep, Volodymyr Zelenskyy’s evening address to Ukrainians just to kind of see what’s going on. And he was great earlier this week, where he said Russia is resorting to energy terrorism in Ukraine and in Europe. And he said I have a message for you Vladimir Putin: We’re not going to give in. So that’s important to be clear about. It’s also the case that given this situation, our allies, our partners, are calling on everyone who can produce energy to step up. And actually in the latest G7 finance minister’s statement, one of the items there, one of the points that we all agreed to, was calling on countries that produce oil and gas to step up production to support Europe. And Jonathan Wilkinson, our minister of natural resources, has answered that call. And he has said that Canada this year is going to produce 300 thousand more barrels of oil than we had previously been projecting. So I do agree with that. And look, I also agree that we need to have a collaborative approach with the oil and gas sector and the thing that I am most excited about right now is CCUS. I am very—you know, we are working very closely with the Pathways Alliance. I’d love to see the province of Alberta step up and contribute to that as well. I think CCUS holds tremendous opportunities for Canada. These are really, really big investments we’re talking about. That is a lot of jobs, a lot of growth, the geological formations of Alberta are kind of uniquely positive for CCUS. I would like to see Canadian leadership there and that’s a way that we have economic growth and climate action at the same time.
Mercedes Stephenson: Deputy Prime Minister and Finance Minister Chrystia Freeland, thank you so much for joining us today.
Chrystia Freeland, Deputy Prime Minister and Finance Minister: Great to talk to you, Mercedes.
Mercedes Stephenson: Up next, a crucial test for U.S. democracy as Americans head the polls in midterm elections. The Atlantic’s David Frum weighs in on the Trump effect.
David Frum, Staff Writer, The Atlantic: “He plays this game much more ruthlessly than people played it before. He’s able to lever his control of a minority to an attack on the whole system.”
Joe Biden, American President: “It’s estimated that there are more than 300 election deniers on the ballot all across America this year. We can’t ignore the impact this is having on our country. It is damaging, it’s corrosive and it’s destructive. And I want to be very clear: This is not about me. It’s about all of us. It’s about what makes America ‘America.’”
Mercedes Stephenson: That’s U.S. President Joe Biden with a warning about the future of democracy in the United States ahead of Tuesday’s crucial midterm elections.
American voters are heading to the polls for the first time since the January 6th attack on the U.S. Capitol, and it’s clear former United States President Donald Trump remains an influential player in this election. With polls showing an extremely tight race for control of the Senate, there’s a lot at stake for the Biden administration.
Joining me now to talk about this midterm elections and what they will mean for the United States as well as Canada is David Frum, he’s a well-known political commentator, author and staff writer at The Atlantic. Nice to see you, David.
David Frum, Staff Writer, The Atlantic: Thank you.
Mercedes Stephenson: You know we just heard Joe Biden there talking about his concerns about democracy. He says democracy is on the ballot. What does that mean?
David Frum, Staff Writer, The Atlantic: This may seem strange to Canadians, but there’s no American equivalent to Elections Canada. There’s no independent government agency that runs elections in a way that is fair to all the people who want to participate in the elections. Instead, elections are run by officials at the state level who are elected in partisan contexts. And one of the major goals of pro-Trump Republicans has been to elect to these jobs, which are from the obscure title of secretary of state of the particular state. Secretary State of Kentucky, of Tennessee and then there’s some more—even more local figures at the county and city level, to elect pro-Trump weirdos to these jobs, people who believe in all kinds of QAnon conspiracy theories. And they have been very successful at winning nomination fights inside the Republican Party. And if the Republicans have a good year in 2022, which it looks like they will, they will elect many, many of these people to run elections in a way that is without—that is aggressively unfair, that will set aside the will of the voters.
One more thing, a lot of these same people believe that in a presidential election, the State legislature has—has the power, or should have the power, to throw out how the ordinary people vote and to substitute its own preference. So if the majority of the people in Pennsylvania vote for Biden, but if the Pennsylvania state legislature has a Republican majority, these advocates feel that that legislature should be free and the power to throw out the vote and to insert itself instead. Those are the things that Joe Biden is talking about.
Mercedes Stephenson: So you feel there is a very real risk and threat here of democracy being subverted and of these pro-Trump individuals subverting the election results, interfering actively in the election to create the outcome they want rather than the will of the people.
David Frum, Staff Writer, The Atlantic: Look, if you know somebody who got blind drunk last New Year’s Eve, got into a car and drove into a tree, and they tell you I’m planning on going to another new year’s party this new year’s. Would you say there’s a good risk they might hit a tree again? Yeah, it’s—these are not hypothetical. This is exactly what happened in 2020 and 2021. A lot of people who were loyal to President Trump did try back then to overturn elections in exactly the way I just described. They didn’t quite have the power to do it, but the results of 2022 mean they may have the power to do it in 2024.
Mercedes Stephenson: Why do you think it is that Donald Trump still has this appeal? A lot of folks thought that perhaps after the January 6th hearings, people would hear what happened there. They’d be horrified and they would back away because they believed it wasn’t really an insurrection or there wasn’t really that much violence. And then when the information came out in those hearings that they would change their mind, but it doesn’t seem to have dented his popularity.
David Frum, Staff Writer, The Atlantic: Well let’s put the popularity in context. Since the year 2000, there have been six presidential elections. There have been 12 major party candidates in those six elections. If you stack them from one through 12, according to the share of the vote they got, Donald Trump ranks 10th and 11th. He’s not—he wasn’t a very popular candidate for president and as president, there was not a single day of his presidency when he had an approval rating over 50 per cent. What he does have is a tight hold of a majority of a minority. That is a majority within the Republican Party, which is a minority in the country. And because he plays this game much more ruthlessly than people have played it before, he’s able to lever his control of a minority to an attack on the whole system. And when he declares for president after this election, which it looks like he’s preparing to do, that’s going to become one of the single most important issues in American politics, is you have the guy who tried to overturn the last election by violence, running for the presidency in the next election.
Mercedes Stephenson: You used to be a Republican. I remember those days. What is going on in the Republican Party now that they’re willing to accept this instead of distancing themself from Donald Trump?
David Frum, Staff Writer, The Atlantic: I’m still a registered Republican and look, there—on a lot of the issues, I probably see the world more a Republican way than a democratic way with the issues that dominate this election, which are how do you control inflation? Do you—should you spend less? I would say yes. What do you do about the rise in crime in American cities? Do you need more police and more sentences of people who break the law? I would say yes. I would give Republican answers to those questions. But the first loyalty, as Liz Cheney said, is to the system itself. You know, you have to accept in a democracy, you’re not going to get your way all the time. And that’s a good thing. It’s good for us not to get our way all the time. It’s good for us to have to sell our ideas and it’s good for us. If we don’t do a good enough job selling our ideas, it’s good for us to lose. It’s good for the ideas. It makes the ideas better. It is not a scandal or a shame in a democracy to lose. Everybody loses sooner or later, that’s the way the system is supposed to work. So what is going at the Republican Party is that a lot of Republican office holders feel and say—feel the same things I do, think them, say them in private but are too weak and cowardly to do anything about them.
Mercedes Stephenson: Do you think part of this is the Biden administration’s governance? Do you think they failed to govern as convincingly as they could and that’s emboldened people who might have otherwise voted for them, who just say, you know, I feel like he’s not doing that great of a job?
David Frum, Staff Writer, The Atlantic: There are—there are problem—at first there were authentic mistakes. Some of them Biden, some of them lower level officials. And one of the things that Americans have very much on their minds is the crime and disorder. That’s nothing that the federal government can do very much about. Those are state and local officials who are not enforcing laws, not—not keeping dangerous people off the streets. Not a lot the president can do. There are some things that were bad decisions that the president himself made early on. Not—he changed a lot of Trump border policies that have resulted in an influx of millions of people, unauthorized, walking across the border as if they had every right to do it, which they don’t. And of course, his spending decisions have aggravated the inflation that is a problem everywhere in the developed world and in some countries more even than the United States. But had he spent less, the inflation in the United States might be less—less bad. So those are real mistakes. But it’s also true that presidents—the part of the president almost always loses seats two years in. That’s—that’s part of way the system balances itself. It shouldn’t be scary if when that happens. That is again, normal. But the problem is the party that is poised to make these gains is one that is not committed to the democratic system anymore, as much as it ought to be.
Mercedes Stephenson: What do you think the chances are of the Republicans taking the House and the Senate?
David Frum, Staff Writer, The Atlantic: I would say the chances of taking the House are near certain, as close to certain as you can be a—a few days out. It would be a miracle if they don’t. It’d be a miracle for the Democrats if they don’t. The Senate is a little bit—much more up for grabs because in the Senate, individual personalities matter and President Trump stalked with the Republicans with a lot of terrible, loser, lame candidates. In Georgia, for example, you’ve been following that race. That should be an easy Republican pickup. Instead, Donald Trump forced on the party a former football star, which turned out to have paid for not one but two abortions as a pro—while being a pro-lifer who insists that no one else should ever have an abortion, but he forced—forced them onto women with whom his was in relationships. So they may lose the Georgia seat because of that. They may lose a winnable seat in Pennsylvania. They may lose a winnable seat in Arizona. So it’s not impossible that the Democrats hold on in the Senate, but it’s more probable that the Republicans take both.
Mercedes Stephenson: What’s at stake for Canada if the Republicans do take both?
David Frum, Staff Writer, The Atlantic: Two things, I think Canadians need to worry about very immediately. The first is that the Republicans are arriving with a view to try to force the Biden administration to spend less, which is a fair thing to want to do and that they’re going to use a fight over the debt ceiling to try to insist on this. The world saw this happen in 2011, in another one of these standoffs and it very nearly ended in a default on the obligation of the U.S. Government, which would be a heart attack to the entire global financial system. The U.S. Government is the largest purchaser of goods and services on Planet Earth. Now a lot of people are selling goods and services to other people, with U.S. cover—Government as the end consumer. You may not know that when you make your sale and get your payment. But if the U.S. Government stops paying at the end of the line, that’s going to reverberate all the way down the line and a lot of people had no idea that they depended on the U.S. Government are going to discover that they did and if the U.S. Government defaults as could happen in January, February, this is a global financial heart attack. So that’s one thing Canadians need to worry about.
The second is that the Republicans will bring with them a—an important minority, especially in the House that is opposed to supporting Ukraine in its fight for independence against Russia. Now the leadership is for Ukraine. The majority of Republicans, both House and Senate, are for Ukraine, but an important minority in the House are against and that could have serious consequences.
Mercedes Stephenson: David Frum, we will certainly be keeping a close eye both on the midterms and the outcomes for us here up North. Always wonderful to see you. Thanks so much for joining us today.
David Frum, Staff Writer, The Atlantic: Thank you.
Mercedes Stephenson: Up next, what we’re watching: The U.N. Climate Summit COP 27 gets underway in Egypt and more revealing testimony at the Emergencies Act Inquiry. We’ll have all that right after this break.
Mercedes Stephenson: Environment Minister Steven Guilbeault will be leading the Canadian delegation to COP 27 in Egypt. While Canada hasn’t outlined specific goals for the summit, the minister says he will continue to push for emissions reductions. Meanwhile activist Greta Thunberg says she will not be in attendance, calling the summit a scam. We’ll be watching to see if COP 27 results in any real climate action.
And it was a big week at the Emergencies Act Inquiry: High profile convoy organizers revealed disorganization behind the protest lines. We also learned that the convoy received leaks from a law enforcement.
Keith Wilson, Freedom Convoy 2022 lawyer: “Obviously someone would have been in a room, or got a memo, or an email saying this is what we’re doing Friday night, and then they would call someone and say hey, phone so and so and let them know this is what’s going. It was always multi-layered, so you never know exactly who the source was.”
Police officials are scheduled to testify this coming week. Their testimony will help establish whether there was a national security threat.
That’s our show for today. Thanks for watching. For The West Block, I’m Mercedes Stephenson. I’ll see you next Sunday. Have a great week.