By Jack Mintz, November 7, 2022
In next week’s midterm elections in the United States, President Joe Biden’s Democrats will be judged by the electorate. In the past year, Biden has pushed up deficits and taxes to fund a hefty dose of climate, social and industrial subsidies, growth-inhibiting regulations, infrastructure spending and student-loan forgiveness. With runaway inflation and rising interest rates and energy costs, Americans will decide if they like this policy mix or not.
If the polls are right, it looks like the Democrats are in for a shellacking, losing the House and likely the Senate as Republican support surges over economic issues. It is ironic, therefore, that Prime Minister Justin Trudeau’s Liberals chose the same unsuccessful policy path as the Democrats in Thursday’s fiscal update.
The Liberals walk through the valley of inflation and rising interest rates brandishing new deficit-financed spending and tax increases, albeit on a much smaller scale than Biden. With an inflation-induced budget windfall of $30 billion for the 2022-23 fiscal year, almost half has been devoted to new spending in 2022-23, with the balance used to reduce the deficit.