Tuesday, March 4, 2008

Bad on trade = bad for Canada

Democratic presidential hopeful Barack Obama
in San Antonio, Texas yesterday. (Win McNamee, Getty Images)

It is difficult to overstate the severity of the hosing Canadians will experience if Barack Obama becomes president of the United States.

The foremost way in which the callow Senator from Illinois would snatch the double-double from our Timmy's is evident in his attitude toward trade. In pursuit of blue-collar primary votes in Wisconsin and Ohio, and in defiance of the fact that U.S. manufacturing jobs have been declining since 1979, Obama has effectively scapegoated the North American Free Trade Agreement (NAFTA) for job losses, promising to revisit, and perhaps withdraw from, the treaty.

Slapping tariffs on Canadian exports would hurt folks on both sides of the border. (Does Obama suppose that duties on American exports will actually revitalize the U.S. manufacturing base?). The same organized labour groups that clamour against NAFTA (or any free trade deal, really) would do far better to encourage a cut in corporate tax rates, assuming their ambition is to bring back jobs. Such a move in the United States would prompt similar action in Canada, helping all of our workers.

But this is not in Obama's playbook. Whether Canadians know it or not, his election would hit us squarely in the wallet.

Here is a simple truth with which Canadians should acquaint themselves: Republicans are generally free traders; Democrats, not. Since two Republican presidents and one Conservative prime minister effected the Canada-U.S. free trade agreement in 1989, trade between our two countries has tripled. Bill Clinton's acceptance of NAFTA in 1993 remains a heresy to many in his party -- including his wife and her rival for the Democratic presidential nomination, Obama.

But trade is only one aspect of Obama's abysmal agenda. His misbegotten economic and foreign-policy prescriptions matter, too. He plans to raise taxes across the board -- doubling capital gains, increasing inheritance taxes to 55%, and hiking income taxes to such levels that Americans could see marginal rates at the 65-70% range of the bad old days. The American economy is already facing a recession; with Obama's help, a full-on depression is achievable. And as the American economy goes, so does that of Canada.

There is much talk about Obama as the agent of "hope" and "change," and his energy and youth have prompted comparisons to John F. Kennedy. But JFK understood the value of letting businesspeople do business, within and across borders. Kennedy's tax cuts were larger than those of any president since --including Ronald Reagan and George W. Bush -- resulting in higher tax receipts for years, and buoying the North American economy.

From a broader perspective, consider Obama's threats to invade Pakistan, negotiate without condition with Cuba and Iran, and cut off exports from China. "Hope," indeed! One hopes Obama does not mean a word he is saying. He is Jimmy Carter without the foreign-policy acumen.

We have all dodged a bullet with the collapse of Hillary Clinton's 2008 presidential campaign (but expect to see her screeching back in 2012, like Glenn Close coming out of that bathtub). The big-government, high-tax protectionist notions that animate Hillary's political philosophy, however, are still part of this presidential contest, and they are embodied by Obama. This is not good news for Canadians, however compelling they may find Obama to be.

For various ideological reasons, Canadians most often identify with the Democratic candidates in American presidential contests. As Barack Obama prepares to hobble America's economy, close its borders to trade and legitimize our shared enemies, Canadians ought to reconsider their outlook.