Photo from www.draplin.com

Seemingly lost amidst the Olympic shuffle last week was an announcement by the Harper government on reaching an agreement with the United States that allowed for Canadian exceptions to the highly contentious “Buy American” regulations. The regulations, imposed last-year by the U.S. government, blocked Canadian manufacturers from bidding on almost $800-billion worth of contracts tied to stimulus spending by the U.S. government.

Given the high-profile nature of the spat and the political capital such an agreement should generate, it seems strange that the Harper government would downplay the announcement by burying it amidst Olympic fever. A closer look at the details of the agreement, however, indicate why this might be the case.
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After the near-death experience for the Harper Conservatives in November, I expected Prime Minister Harper and Finance Minister Jim Flaherty to table a budget that would be responsive to growing concerns about the state of the Canadian economy.

And I admit, many of the budget leaks leading up to the official announcement made it seem like Harper was finally in touch with this reality – the proposed increased spending on infrastructure and programmes would provide jobs while tax cuts would spur consumer spending.

When the budget was finally tabled, it did address a number of these issues. And while I applaud the government for making much-needed (and highly uncharacteristic) investments in social spending, they really missed the ball on one key issue …

Employment Insurance (EI).
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Liberal Leader Michael Ignatieff Will Support the Federal Budget With Conditions

As we’re all probably aware of by now, (since NOTHING else has really happened in Canadian politics for the past month…yawn) Michael Ignatieff has decided to support the Conservative budget that was unveiled 2 days ago. But not without an interesting twist:

The Liberal party will only support the minority Conservative government’s federal budget if Prime Minister Stephen Harper agrees to an amendment calling for a “clear marker” of regular updates to Parliament on the impact of economic stimulus projects, Liberal Leader Michael Ignatieff said Wednesday.

By supporting the budget, Michael Ignatieff is passing on an opportunity to take down the Conservative government and in doing so, trigger an election or enter into a coalition with the NDP and the Bloc Quebecois. Many Liberals are obviously not happy. The last thing they wanted was for their leader to abandon the coalition. But it’s all part of Ignatieff’s long-term agenda to seize power.

So what’s really behind Ignatieff’s demand that Harper provide regular updates to Parliament? An interesting Liberal strategy – I call it the Waiting Game.
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Finance Minister Jim Flaherty Presents Government Budget

Today, the federal government revealed its highly anticipated budget and stimulus plan for pulling our sagging economy out of recession. To sum up in one sentence, the Tories are going to spend tens of billions of dollars to try and pump money into the economy, and Canada will have to weather large deficits along the way. Whatever it takes to keep our economy moving was the message from Finance Minister Jim Flaherty.

A deficit of $33.7 billion for the 2009-10 fiscal year and $29.8 billion the following year is predicted. For 2011-12, the red ink would diminish to $13 billion, followed by a deficit of $7.3 billion for 2012-13. Keeping the Conservatives’ track record regarding their forecasts of budget deficits/surpluses in mind, it seems like these numbers could turn out to be much, much larger. Just months ago, Harper was predicting small surpluses for the coming years, then altered his forecast to small deficits, and now massive ones. That leads me to believe these deficits could turn out to be much larger that we think. If the economy worsens beyond what is expected, this would certainly be true. “If they get worse, we will do more,” said Flaherty, speaking about economic conditions in Canada.

The budget dealt with many different aspects of the economy and Canada, but here is an overview of the major categories:
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So what was the big news of the day? “Canadians face a difficult year — perhaps several difficult years,” declared Governor General Michaëlle Jean in today’s throne speech from Parliament Hill.

Are you kidding me?!!?! I would have never thought. Although, now that I think about it, there have been some warning signs.

#5. The downturn in housing markets is still unfolding here in Canada, with reduced credit supply likely adding to pressures.

#4. The auto sector and forestry industry can barely stay above water.
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Today's Speech From the Throne

There’s no doubt the last few weeks in Canadian politics have been fairly boring and uneventful, especially relative to the recent coalition fiasco. But things sure look like they’ll be picking up again, fast.

Today’s Speech From the Throne paved the way for what is sure to be an exciting week in Canadian politics. Although today’s speech was only 4 pages long compared to the controversial November 19th speech 16 pages in length, it was jam-packed and heavily focused on our sagging economy. The exact details of the stimulus plan will be announced tomorrow, but according to today’s speech, massive efforts will take place to boost the economy through deficit spending.

Here’s what we do know about the stimulus plan to be announced tomorrow thanks to leaks from the Conservatives:
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Honourable Iggy thinks our PM is playing games again.  According to Lord Ig, Mr. Harper has no respect for Parliament because he’s letting a few choice budget details slip out beforehand. Before we all get our shorts in a knot, let’s not forget that this budget slippage scenario was I believe (correct me if I’m wrong) started by none other than … Paul Martin.

Mind you, Paul’s strategy was meant to gently stoke the peace loving natives and booming markets of our great Dominion – in times of plenty. Mr. Harper’s may well be designed to divide and conquer them. A measly $1-billion for displaced workers. Buzz Hargrove wanted that for the auto sector alone. Sure enough, he’s turning the air blue on the phone already.  But who is he talking to?  Is it smilin’ Jack and his blinkered bunch of budget busters. Or is it Iggy – Buzz’s future boss when he finally pursues his political career.

Meanwhile here in Quebec, Gilles Duceppe and Pauline Marois watch gleefully as their approval ratings climb – for doing diddly squat. And Premier Charest looks for another way to suck more dough out of the federal coffers to keep his propped up. God only knows where it all goes. Our provincial health care system is abysmal, our taxes outrageous, water pipes are bursting in air and we’re decades behind the R.O.C. on more than one portfolio.
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