Economically Weak US Could Be Damaging to Canada
“…If we end up getting an economically weak United States of America, that could be very damaging to Canada”, said Frank McKenna, deputy chair of TD Group and Canada’s former ambassador to the United States, at a Burlington Chamber of Commerce audience on October 31, “…Canada needs a stable American government, but getting that will demand a level of compromise missing from the current landscape.”
“My view is that the choice of candidate or party is less important than the stability of the government,” he said.
“Canada has been served well under Republican and Democratic administrations at the presidential level”, he added.
With probability of Republicans taking control of the House of Representatives and Senate dominated by Democrats, to pass any legislation, some level of compromise will have to be reached.
“That raises a troubling question because the Republicans have been pushed far to the right by the Tea Party fringe which, so far, hasn’t shown any willingness to compromise. (The Tea Party is the group which last year almost pushed the United States into debt default by refusing to compromise on legislation to raise the country’s debt ceiling.)`, writes Steve Arnold in TheSpec.com.
“… A number of people are going to get elected simply on the promise they won’t compromise with the other side,” McKenna said. “Getting the compromise that’s needed is going to be extraordinarily difficult.”
Under the influence of that group, the Republican platform has included critical planks such as cutting $1 trillion from American public spending, renewing deep tax cuts from the George W. Bush era and freezing America’s debt ceiling.
Unless they are softened, McKenna said, those initiatives have the potential to push the American economy back into recession, dragging Canada along with it.
“There is a real chance we’ll end having different parties in control of at least two branches of the government. It doesn’t mean you can’t get things done — the United States has always been able to muddle through — but right now we need some decisive action on a set of issues that could imperil the economic recovery if they’re not dealt with,” he said. “To date the Tea Party hasn’t demonstrated ability to compromise, but after this election they may.”
As for the presidential race, McKenna said the winner will probably be decided by a handful of swing states including Florida, Michigan and Ohio. Currently, Mitt Romney and Barack Obama appear to be in a dead heat although Obama has a slight edge in states with more Electoral College votes.
That raises the possibility of another election like the 2000 George W. Bush-Al Gore contest where Gore won the popular vote but Bush won in the Electoral College.
Whichever candidate wins, McKenna said, it’s important he take strong action on the U.S. economy because a vibrant American economy is crucial to Canadian trade.
About 40 per cent of Canada’s gross domestic product depends on the United States, which is the destination for about 90 per cent of Canadian foreign trade.
“Our trade relationship with the United States of America is deep and very meaningful,” he said. “It is the biggest commercial relationship in the world. We do more business with the United States than with all 27 countries in Europe and more across one bridge than we do with Japan.”