How bad will economic pain be? Liberal moves keep us guessing
What does the federal government know about the state of the economy that the rest of us don’t?
The Liberals displayed a shocking lapse in judgment this week by lacing their legislation for economic aid with an attempt to corner vast tax-andspend powers for the next 21 months.
Aside from blundering politically and underestimating the opposition’s propensity to act in the public interest, the Liberals’ belief that they would need those sweeping powers to use the federal coffers without parliamentary approval until the end of 2021 suggests a profoundly pessimistic view of Canada’s economy and its ability to bounce back.
But that’s not what they say out in the open. They don’t actually say much about the economy’s path out in the open, beyond recognizing that it’s awful right now and giving us reassurance that it will all go away at some point.
For sure, there is no certainty to be had in this deep and evolving financial and economic crisis. But there is solid analysis, no doubt much of it being done by the ample and able army of economists and analysts housed at the Department of Finance.
The problem is, the public has no access to their forward thinking at a time when many individuals and companies are desperate to forge contingency plans and stay afloat.
Instead, we have to stitch together clues about where the economy is heading — and the draft legislation suggests the federal best-case scenario is for this to be a long, brutal haul.
We do have projections from private-sector economists who are trying valiantly to wrap their heads around this catastrophe. Their forecasts are revised frequently, usually for the worse, and there is no consensus on exactly how bad things will get or when they will get better. They do, however, agree that the downturn we are experiencing right now is unlike any other — deeper and more harmful to businesses and individuals’ finances than anything most of us have ever experienced.
And they do generally agree that with the right government and central-bank measures, we can bounce back. When and how fully? That’s up for debate. Some say we’ll be able to pick up where we left off this year, and some say it will take longer to get back on our feet. Some see permanent damage to the economy; others say it’s in our power to mend more fully.
What does the federal government have to say about all that? “Stay tuned” is the mostoften repeated answer in Ottawa these days. There is little discussion about possible trajectories, what the variables are, or what the possible solutions are.
We can’t stay tuned for a budget to lay it all out because the budget has been put into limbo by a suspended Parliament. We could look to Statistics Canada for some real-time data on how bad things are, but it has curtailed its releases, and regardless, it doesn’t project or analyze.
What aren’t the federal analysts telling us? Lots. We don’t have a week-by-week accounting of claims for Employment Insurance — a solid indicator of the dynamic of layoffs — unless the prime minister blurts it out at a news conference. We have a commitment from the commercial banks that they will stand ready to renegotiate their customers’ mortgages and loans, but we don’t have any way of knowing if that is actually happening on a wide scale or to what extent they are turning people away.
Instead, we have bland assurances that all will eventually be OK.
But the draft sections of the legislation that were scrapped tell us that the Liberals suspect the recovery will require extraordinary measures far into the future.
A few months of fiscal firepower probably won’t be sufficient and is not their most likely scenario.
How does a company that has lost all its revenue or an individual who can’t pay the rent attempt to bridge to the future with bread crumbs like that?
At the margins, it’s comforting to know that they are ready and willing to spend, lend and move around taxes to get us through. But it would be a lot more useful if we had any understanding of why they feel they need to be ready with this kind of aid for almost two years.
It’s hard to know how bad it will be, where the pain is, how to fix it and where the hope lies unless the federal government is straight with us.