The Bridge with Peter Mansbridge - Moore Butts Encore -- The Trump, Carney, Ford Mess

Episode Date: December 30, 2025

Encore Episode. How do two former Ottawa pros see the Trump, Carney, Ford story -- does it really matter? Will it make a real difference? Former Harper cabinet minister James Moore and former Trudeau advisor Gerald Butts get together for their Conversation #26. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And hello there, Peter Mansbridge here, and welcome to our holiday season, encore episodes of the bridge. All of us here at the bridge send you the best for the holidays. So enjoy now one of our episodes a second time from the fall of 2025. It's Moore Butts, Conversation number 26. Ford, Carney, Trump, it's all coming right up. And hello there. Welcome to Tuesday. And Moribut's conversation is coming your way in a few minutes time.

But a couple of things to talk about first. It was early yesterday morning when I got up, I guess, earlier than usual. It's probably somewhere around 5 o'clock. Something was nagging at me. I thought I better check my email and I did. And as so often happens on times like that, it's sad news that travels fast and starts your day. It was in my case because it was the passing of Tim Cook,

the great Canadian military historian, historian paroxalance. I'd work with Tim more than a few times in Europe, in Canada, on Remembrance Day, during my CBC days, and here at the bridge, where Tim had been a guest more than a few times, usually talking about one of his books. He died young. You know, Tim was a student of the great Jack Granite, Steve. who I'd also worked with. And Jack and I had done a lot of shows together,

and as Jack moved into his retirement years, he certainly recommended Tim, and Tim was there for us, and still is, still does shows. In fact, he just did the 80th anniversary of the liberation of the Netherlands by Canadian troops around Appledorn, he did that with Adrian Arsenal just a few months ago back in May and he wrote to me at that time

and he wrote to Jack he wrote us an email saying how some of the work that Jack and I had done in the 90s on the D-Day 50th anniversary of D-Day and the 50th anniversary of the liberation of the Netherlands how that had been an inspiration for him

and how we always looked at those shows as markers in terms of getting Canadians to remember their past. Well, now Tim's gone, and it's, you know, that's hard news for those of us who've worked with Tim and have relied upon Tim and his books to tell us about our past. You know, as a result, this Wednesday, tomorrow, I will, our encore edition will be my last interview with Tim

from about this time last year when his book, The Good Allies, the relationship, really, between the U.S. and Canada on our military pass. another very successful Tim Cook book and we'll replay that in honor of Tim on Wednesday of this week. But after I read that email yesterday and as the sun was coming up over the North Sea, which I look out on every morning, you know, I remember Tim and I, you know,

I thought, as I looked out at those waters, that a lot of Canadian boys cross those waters, either by sea or by air, during both wars, actually, the First World War and the Second World War. And their memories are alive today and continue today as a result of the work of Tim Cook. He wrote, I think, almost 20 books, I think 19, I think he was knowing Tim, I'm sure he was working on his latest in these past weeks and months. If you get an opportunity and you haven't already read one of Tim Cook's books, go and pick one up now. All right Question of the week You still got time to answer this one

You've got until 6 p.m. Eastern Time tomorrow The Mansbridge podcast at gmail.com is the place to write Include your name and the location That you're writing from Keep it a 75 words or fewer That's not just pleased That is the requirement Here's the question.

Is it smart to expand the relationship with China, or does that have dangerous downsides? It's one of the discussions that's going on this week. The prime minister is in Asia, and he's having a variety of talks, as has his cabinet minister, Anita Anandah, the Foreign Affairs Minister, last week I think she was in China. and there's every indication that that relationship is going to expand. So the question to you is, is it smart to expand the relationship with China? Or does that have dangerous downsides?

So you've got still 6 p.m. tomorrow to get your answers in on that question. Okay. Let's get to today's discussion. With James Moore, the former Conservative Cabinet Minister under Stephen Harper, and Gerald Butts, the former principal secretary to Justin Trudeau in 2015, when he became Prime Minister, Justin Trudeau, that is. And before that, he had a similar position for Dalton McGinty in the Ontario government in the early 2000s.

And they both have had some great conversations with us on the Moribut's conversations. This is the 26th one. And you're going to see we're dealing with a couple of topics today. So enough from me. Let's get right at it with our introduction to Warren Butts number 20. All right, gentlemen, I'm not sure where this story will be by the time we air this program on Tuesday, but let's give it a go anyway, because I think the basics are still going to stay the same. I would love to know what both of you thought from your different perspectives

and what you're thinking in terms of the whole Doug Ford ad, Trump's reaction to it, Mark Carney's reaction to it how this plays out what it all means in terms of the trade negotiations I mean there seem to be on hold they're up they're down the ads up it's down

what did you make of all this James why don't you start us on this kind of par for the course I mean I'll start with the prime minister's reaction because I think he set the appropriate tone and it was good that he came up pretty quickly on the tarmac before he went over the Pacific Ocean and he just was very dispassion kind of behind the scenes maybe he's pulling his hair out maybe he's throwing so i don't know what you know

his temper might be might be like but what matters is the public face of it and the public face of it was yeah we know we always kind of knew that this is going to be difficult and we always kind of knew that this and that and you know premier for it has a right to have a voice and you know we're going to continue to move forward and we're like just a very sort of a non-emotional reaction and just kind of a resetting that, you know, things are going to be difficult and, you know, we'll, we'll play the long game. That's the appropriate reality. But the truth is with Donald Trump, you know, we've, you know, everybody recognizes we've got more than three years left of all this, you know, spasms and who the hell knows where it's going to go tomorrow. It may be rectified.

Jerry will remember right before we finally arrived at landing the plane, oh, it's now the Kuzma agreement. It was really dark for the like two weeks leading right up to that. It was its most chaotic and scrambled them. Donald Trump openly threatening to abrogate the agreement and, you know, we're, we're not going to have any kind of independent enforcement clause. Like there's all kinds of scrum, and then it stopped. And then there's quiet. And then Donald Trump pivoted and moved away.

And so, you know, there's all the speculation that they may have some kind of a more tectonic agreement that would align security and economics and keystones on the table and maybe golden dome or some kind of big thing that would be, that would be. would satiate the president and not jeopardize the liberal's political world and that, you know, key players in the prime minister's government are down there. And maybe this is sort of some rattling right before APEC. I don't know. Maybe Donald Trump is angry that he's getting bad coverage over putting in his ballroom onto the east wing and didn't like the, you know, the visuals of the wall being torn to, I don't know. But you just kind of have to not react. You have to be non-emotional and

respond methodically and the prime minister's doing that so far jerry well i certainly agree with james on the prime minister's reaction there's lots of sound and fury in the nations media this week about how dare mark kearney put his elbows down when he campaigned on being elbows up and that's why he got elected that's not why he got elected he got elected to be the adult in the room and that's exactly what he was so i think that the prime minister did the right thing it was definitely consistent with who he sold himself to be during the campaign and afterward, and frankly, who he is. And I think Premier Ford did the same thing. You know, Doug Ford is more of a populist premier.

If he sees an issue like this, the World Series is coming to town, there's going to be a lot of attention on Canada-U.S. relations. He's got a chance to make himself look like a tough guy. There's no downside for him personally or politically. And I would say the same thing for Premier Canoe, who I quite admire. I think that both of those gentlemen see the value in playing to their home turf. The question is whether it will have any durable downside for the negotiations. And my guess is that it isn't.

I've seen these things with Trump before. I doubt he, if he truly is walking away from the table, and I think that that remains to be seen, whether he is, we'll see what happens at APEC at the beginning of next week, if he and the prime minister do meet. I suspect he had much different reasons for wanting to walk away from the table at this point that perhaps there were, I heard Chantelle I Barr say this on your show on last week, and I would certainly agree with her.

There's probably something going on. They expected to get a concession. They're not getting. So they're looking to flip over the poker table because that's the way they do it. And I think it's a bunch of noise, frankly. do you think that i mean he's he's a president who's easily offended he's easily flattered but there's no evidence that he has a long memory for incidents but he but once he decides he doesn't like you it it's over and we see that with justin trudeau we've seen that with a bunch of people but i mean

you look at the things that marco rubio said now he's a secretary state you look at the things that ted cruz and others have said and they're brought into the tent so there's no evidence that he has a long memory for things that offend him in the moment but if he decides that an individual he doesn't like them that doesn't seem to be reconcilable. And Doug Ford is definitely in that camp right now from the conversations I've had with American officials over the past few months, certainly leading up to our Eurasia Group County U.S. summit in Toronto a couple of weeks ago.

And it does remind me, frankly, of when the president changed his mind about our former prime minister. It was an incident around the Charlavois G7, which we'll all remember, where the prime minister and the president had a very productive and warm bylap behind the with the cameras off. And the prime minister went out in his press wrap and said what he'd been saying for months beforehand. But Trump just never happened to hear it. And he heard it that time. And he thought that the prime minister had, the prime minister Trudeau had betrayed the confidence that he had given him behind closed doors. So it was more of a misunderstanding than anything else. But James is

absolutely right. The relationship fell off the table then. It fell off a cliff then and it never really recovered. Do you think there's you know, Trump seems to be particularly sensitive about the Reagan stuff even seems to have got the Reagan library or whoever it was to say what

they said, which doesn't, you know, jive with the facts of the Reagan speech that's being quoted. But does that hurt him Trump in terms of his electoral stuff or do you think nobody cares nobody nobody in the United States cares what Ronald Reagan thought about trade 40 years ago and you may recall this the prime minister Trudeau gave a very important speech which nobody remembers

because it happened it happened to happen at the same moment that Colton Bushie's killer was acquitted by a Saskatchewan jury like literally the same time But he gave a speech right at that period where James is talking about a nadir of NAFTA at the Reagan Library in Simi Valley, where we assembled basically every prominent Republican west of the Mississippi to hear that message to appeal to their Reagan heartstrings, which you could sort of barely still do at that time. And in private conversations, I actually think this is an interesting yard marker, Peter, for how much the Republican Party and the Republican movement has been taken over by MAGA in the intervening years. That we had a very sympathetic audience, lots of prominent Republicans who were supportive of the position we were taking. We quoted Reagan at length. We had a private tour of the library, lovely facility in Simi Valley from the person who is, his name escapes me momentarily, who was the head of the Reagan Foundation at the time. And he expressed broad sympathy for where we were our approach to the negotiations.

You fast forward five years later, and Eric Trump is doing a book tour, getting his boots licked by the head of the Reagan Foundation. I mean, the Trump people, MAGA has taken over the Republican movement in the United States. And they've taken over not just because Trump is still there, but there was an interesting report that came out years ago by Elections Canada, I believe it was. It was a report that was published through them anyway. But it's true to say that in Canada, and there's no reason to say it's not true in the United States, that if a young person who votes votes the same way in the first three elections in which they vote, either it's federal provincial or, you know, federal. Provincial, provincial or whatever. But the first three elections, if they vote liberal, liberal, liberal, conservative, conservative. If they consistently vote those first three elections, the odds are over 85% that they will vote the exact same way for their entire life.

It's fair to assume that that's the case in the United States, because why not? And if it's true, then Donald Trump has been around now for more than a decade. He's contested three campaigns plus all the primaries and everything else. So it's mega, mega, mega. So there's a bulge of voters now, young people especially, who have been conditioned that this is the movement. It's not just the man. It's the movement. And so the page has absolutely been turned from the Ronald Reagan era.

It's what it is. Talk to me about the Doug Ford initiative on this. Was it the right thing to do? I mean, he's got an enormous amount at stake here in the talks that are going on in terms of the auto sector, for sure. was it the right thing for him to do because it seems like I'm a little confused here on the one hand I thought this was like pulling out all the stops

to really go and going for the gold in this fight where at the same time you're kind of telling me that it doesn't matter anymore Reagan doesn't play into this what he has to say and what he said 40 years ago about free trade and tariffs

doesn't apply anymore It's just, it's irrelevant. Yeah, I think it's a really risky move for Ford. I think that his calculation is he wants to appear to be standing up for the people you just described without ever having to do anything for them other than run an ad during the World Series. And I think that that kind of, dare I say it, James, virtue signaling politics has its precipitous downsides. Because if it's followed by Donald Trump walking away from the,

negotiation table, that's one thing. But if that is then followed by more plant closures in the auto sector, that's quite another. So I think that Ford has, his calculation is bad things are happening. I need to appear to be fighting against them in the hopes that somebody else gets blamed for them. That's what I think he's doing. I don't think that they're under any illusion that invoking the holy name of Ronald Reagan is going to somehow change Donald Trump's opinion, which he has held since the mid-1980s on tariffs. And I would commend your listeners if they haven't already to read Paul Wells' substack on this, which I think gets right to the heart of the matter, that this is this fight that the young Donald Trump had with the Reagan administration on

trade is a kind of foundational battle in the Republican Party in the United States for the last 40 years. And guess what? Trump won. So if it irritated him, that's probably why. But I think he was, I think if the Ford people thought that they were going to change Donald Trump's mind or galvanize his opposition in the business community with a $75 million ad buy during the World Series, I'd remind them that in the last presidential cycle, there were $17 billion. That's where the B spent to try and persuade the American people of one thing or another. I would just disagree. Trump won.

Well, look, I've got a book of Reagan quotes and the Reagan biography behind me and a Reagan something else on my bookshelf here. It comes with a conservative kit, by the way. But I haven't. In America, James. In America. It didn't. Donald Trump didn't win.

He's having a moment. But in the fullness of time, you know, free trade works. What Donald Trump is doing will not work. It will have an economic consequence and the pendulum will swing back. That's it. But about Doug Ford, look, the ad has been up for a while. And it was circulating and people were laughing about it and liking it for a long time. Even Trump said kind of positive things.

So, yeah. So I do think some of this is performative. But then with Donald Trump, you don't know if performative becomes reality because it kind of gets away from him. and he sees he has a reaction to it and he doubles down on the this and that. But if you look at the comments on the Fox Business News website and even Fox News website, because a lot of stuff that happens in Canada, we pay attention, we wonder if it spills into the United States. This one did. Fine, it did.

And so you look at it and you look at the stories. And, you know, most people say that the ad was accurate. The ad is correct. And that it is a proper representation. Ronald Reagan believed in free trade. He believed in free markets. He put in place temporary tariffs because he felt that he had to against the Japanese in order to protect Harley-David against Japanese motorcycles is where it began.

And at that point, it was a 3% net tariff. So it was like, you know, history and the will flush itself out. But, you know, Donald Trump was at first, he thought he said, I'd probably do the same thing too. So I think, you know, he recognizes game when he sees it. And I don't know. I think that the substance of the agreement, Trump also loses, I think, a lot of credibility. A lot of people, especially in the agricultural sector, say, wait a way, you're going to blow up our biggest customer relationship with our biggest customer because he didn't like an ad.

I don't give a shit about what Ronald Reagan said 40 years ago I'm happy you do but how about my job how about my farm how about my exports so I think I imagine this would be shorter lived than we're anxious about right now yeah and I agree I think those are all excellent point

points James I would add that Trump said something rather ominous I think it was this morning where he said look that was or maybe it was yesterday it was all AI they it must have been AI, fake news, blah, blah, blah.

But then he said, that's playing dirty. And trust me, I can play dirtier than they can't. And I thought to myself, hmm, I wonder what he's got in his mind when he says that. But sometimes he just says stuff. I don't know. I don't know. When he says something like that, he's got something specific in mind. Well, and people around him are much more devious and creative than he's capable of imagining.

And they do have the tools. Okay. Yeah, this is the week after all where Steve Bannon, according to the New Yorker, my old friend, went on, went to troll the economist by telling them that Trump's still going to be president in 2028. I don't know if you guys saw that interview, but it is definitely. The third term stuff. He was on Bill Marloss Friday night doing the same thing. So Marr read him the Constitution. held a copy of it up and said,

I don't know whether you've ever seen this, but let me read you what it says in here about third time. Maybe the original copy was in the East Wing, and it's now under a pile of rubble. If anybody doesn't think that Donald Trump doesn't have visions of himself when he lays in bed at night, and he has visions of himself being re-inograted,

not on the mall, but in his new golden ballroom, then like don't kid yourself. He has visions of where this is what his horizon looks like. Okay. Last point on this before we get to what we were originally going to discuss this week. But you both have enough experience on these kind of things. And Jerry, well, you both do.

And in terms of dealing with Trump on the last go-round on Kuzma, because the conservatives were helping out there at the end on things in James in particular. Where is this going? What do you think is that? going to happen here well i think we're going to end up with a zombie agreement basically i think that we'll come to some kind of saw off on the sectoral uh what are now called the sectoral issues or 232 sectors um like like what does what does that mean seal aluminum uh maybe energy possibly auto although i'm more worried about auto than i am about steel and aluminum because they have

been pretty clear the Americans that they don't think it's right, that Canadians, God forbid, are building cars that end up in the United States, which is nuts, but we can do a whole other topic on that, a whole other show on that. And then we end up with an agreement that is still, I don't think they're going to tear up Kuzma. I think there'll be some changes around the edges. It may be broken into two pieces, so there are two bilateral agreements. That's certainly the desire that the Americans have expressed in public and private, but there's just too much economic gravity around a trillion-dollar trading relationship that there's got to be, there got to be rules. And it's even by Donald Trump standards, blowing that up and starting

afresh is more trouble than it's worth. Why do you call it a zombie agreement? Well, because you'll remember in the quaint days of 2018, 2019, Peter, are the And the main sticking point was whether or not the old Chapter 19 in NAFTA, now we're losing listeners as I described the details of this, but the independent dispute resolution mechanism, which the Mulroney people insisted on in the first place be in the agreement because we weren't going to sign on to a trading agreement with someone who's 10 times our size without an independent referee, right? Now remember that. Imagine that discussion now in 2025 or 2026 and trying to talk Donald Trump into strengthening the independent referee who oversees the USMCA or maintaining it. I think that they'll do what they're doing with the WTO adjudication process, which is that they'll either ignore it completely or they'll stick this, they'll stick a rent. mention the spokes by refusing to appoint people to the adjudication panels. So that's what I mean when I say a zombie agreement. It's still in force.

It's still on paper, but the United States will not abide by it whenever it sees fit not to. James, what do you see? Yeah, that's probably the most probable outcome. But also, Donald Trump doesn't really benefit from actually coming to an agreement, right? Because you come to an agreement and then, you know, agreements can get stale, agreements can have imperfections, economies sort of sort themselves around agreements. And then over the fullness of time, they demonstrate the benefits that the agreement has to Canada and Canadian industries

and businesses may grow. And that's growth that could have happened in the United States if Donald Trump was just a little bit tougher, et cetera, and around you go. So I don't know that Donald Trump, I mean, Mark Carney gains politically if we have an agreement. Donald Trump, if he has an agreement, then all of a sudden his critics come out of the woodwork, especially before the midterms or going into 2028. And they say, Donald Trump didn't quite stand up for you because look at these jobs that could have been here. So, and plus, his base are, you know, they like the sparring. They like the tough guy.

They like the bullying. They like the deal is off and on the tarmac and it's fake news. They like the drama. They like the shit show. You know, most of the rest of the world rolls our eyes, but the shit show is the show for a lot of people. And Donald Trump knows that. And so give them what they want. And so coming to an agreement, you know, gives his critics the ability to show the, the,

the inadequacies in the gray areas of the agreement that can be exploited and then all of a sudden he doesn't look like quite the tough negotiator. So, and by the way, that's not bad for Canada. It'll hurt people in the immediate term in the auto sector, steel and aluminum wood, other sectors, for sure. But in the long term, Canada benefits by a go slow approach in my view. Easy for me to say, I know, but I believe that to be true. Okay.

We're going to take a quick break and then we'll get to our second segment, which is, Was going to be our whole segment today. But we'll get to it anyway, because I think it's pretty important. So we'll do that right after this. And welcome back. You're listening to The Bridge, the Moore Butts Conversations, number 26, I think. And you're listening on Sirius XM, Channel 167, Canada Talks, are on your favorite podcast platform. Glad to have you with us, however you're joined.

us today. Okay, topic number two, and it's actually, it's one of those that, as Jerry said a little earlier when he was starting to talk about sectoral, this or that, and segment, this and that, can be kind of scary and people can run away from, but let me explain to you why it's important. The issue is about deficits and accumulated deficits, which are the debt. In the United States, they're now at $38 trillion as their national debt. Canada's, I think, about $1.4 trillion as a national debt.

Deficits are important, and we'll find out what the latest projections are in the Canadian deficit. when the budget comes down in the next 10 days, two weeks. A lot of decisions are made about the economy in terms of deficit and debt, or are they? And I guess that's kind of the question here. I mean, I'm old enough to remember when they were big political issues, the deficit especially, and the debt. now it's kind of like the party that's not in power

talks about deficit and debt the party that is in power doesn't really talk about it as much they you know they promise to cut taxes at the same time as they're cutting some social programs to try and make up for it but the deficit

seems to keep climbing and therefore, of course, the debt keeps climbing. The Canadian numbers on debt and deficit are actually quite astonishing when you look at them, and I've got them here somewhere. Yeah, by the end of this fiscal year, Canada's total market debt is expected to surpass $1.4 trillion. Every day, this debt grows by more than $100 million.

every day and every second Canada pays more than $1,200 in interest. Those are pretty staggering numbers, but... Out of context there. Okay, to put it in the right context then. Well, it's a $3 trillion economy, and we're one of only nine countries in the world that have a AAA credit writing from all of the people whose job it is to assess the fiscal capacity and the financial stewardship of countries.

Okay, well, that gets to my point, which is, should we care about these numbers? Should we care about the size of the deficit? Should we care about the size of the ever-growing national debt? Yes, absolutely. Absolutely, we should care. But there's a difference between one measure, which, which is obviously an important measure, one measure of a country's fiscal responsibility and overall financial health and a more robust assessment of that metric.

And I think it's really important that we over the mid to long term have our accounts in balance as a country. But if you're obsessed with the deficit in any given year, if your debt to GDP ratio is not something that is alarming markets, which is why we got so obsessed with it in the early to mid-1990s, the Canadian peso and all that stuff, then you can blow things all out of proportion and cause bigger problems elsewhere in the economy. You know, we've now got a generation of underinvestment, for instance, in our both secondary institutions in Canada. That is going to have a long-term negative impact on our capacity to increase productivity, create innovation, and grow the economy. So there are all kinds of things that go into whether or not your economy is financially healthy. the annual deficit of the federal government is just one of them. James?

Yeah, I always have to be careful about comparing country to country because so much of Canada's, you know, Section 91, 92 powers. But actually when you sister together federal and provincial debt and Canada's debt picture is actually significantly worse. We have one of the worst debt dynamics. Certainly in the G7, you look at the amount of indebtedness. Like government spending went from, I had some numbers here as well. Government spending as a share of the economy went from 38% in 2014. to 44% in 2024, which is the biggest growth in government spending of any country in the G7 by a wide margin. Debt servicing costs to Canada, right, $54 billion a year.

The GST brings in about $21 billion a year. So if people want a daily reminder of just the cost of carrying the scale of our debt right now, you would have to more than double the GST in order to pay just the debt servicing costs. So every time you buy something, you know what I'm getting at, right? So, like, as a visual imagination, you know, exercise of the scale of our indebtedness and what it looks like, that's a real problem. And so, like, when you get to the cost of the federal government of our borrowing cost, just the cost to carry the weight of our debt is now $4.5 billion a month. You know, and by the way, this is not just a, you know, a jab at the liberal team or whatever. I mean, this is, this has been a team effort to get to where we are.

And frankly, conservatives have not had an answer so far. Whenever the question of debt and deficits have come up, and frankly, conservatives and Pierre have been asked, you know, what are you going to do to reconcile the national debt? He said, well, the first thing we're going to do is we're going to defund the CBC. Okay. Well, I mean, you'd have to defund the CBC every five and a half days 100 percent in order to pay for the cost of servicing the debt for five days.

So, like, where are we at, right? And you're not going to defund the CBC because you're going to keep the French part whole, which is two third or a third of the cost of the anyways so i mean i don't know that anybody's really serious about getting the the cost under control and dealing with the structural nature of all this and then you of course you pile on top provincial debt and then household debt and it's no wonder that credible thoughtful people are now finally setting up a flare in the night sky saying this is a problem and you may not think it's it's not a problem until it's a problem and then when it's a problem you have to do something significant like the 1995 budget i i totally agree with all that and

I don't want to create the sense that I don't think it's a problem. I think that it needs careful husbanding and stewardship, and it needs to, you know, everybody involved in, it needs to be cognizant of at 24 hours a day. What I'm saying is that the deficit itself is not an adequate measure of a country's fiscal responsibility. And I take everything you say, James, about federalism. but, you know, Moody's, all the other bottom rating agencies, S&P Global, the IMF, Kristallina Georgieva, just said that there are two countries in the G7 that have got their houses in order fiscally.

They both happen to be federations, by the way, Germany and Canada. Those were the two countries she singled out. I do think that we sometimes when the United States gets extraordinarily profit, look at, which is where it is now. Let's, I mean, the United States is running a deficit, a deficit on a debt, a deficit that is around six and a half percent of GDP, which is an astonishing amount of money in the U.S. context, and they are getting away with it because they're the reserve currency. And again, I can feel your listeners falling asleep, Peter, so I won't explain what I mean

by that. But basically, they have the currency, which everybody else uses to denominate their debt. So that means that they can run deficits, they're testing the limits of it, I guess, of this theory, but they can run very large deficits and not pay the cost that, pay the price that other countries would. And by the way, that deficit, Peter, it's really important to pause here because that deficit of the United States matters, frankly, as much as the Canadian deficit does. Because the United States economy is fundamentally important to the Canadian economy for all the reasons that we know. But where we started this conversation, right, about Donald Trump tariffs and where they're going in the United States, the revenue that they're getting $200 billion by the end of this year, the revenue that they're getting from the tariffs that have now been blessed by the Republicans and the Democrats. So it's been blessed as foreigners pay this tax, which is complete economic nonsense and fairy tale. But tariffs have now been blessed as a fundamentally sound revenue source by both the right wing party and the left wing party that it has been blessed as being virtuous.

us. They need the revenue. Tariffs are going to continue to be, whether Donald Trump is there or not. And we talked about how, you know, there's now a whole generation of Republicans who are all mega and what it means on the cultural side and the economic side. But they need the revenue. They're desperate for that revenue, number one. And number two is on steel and aluminum, Pennsylvania is key in the electoral college. When it comes to autos, Michigan is key in the electoral college. You know, from, you know, 2008, 12, 16, 20, 24, 28, those are two swing states in the electoral college. You don't become president without winning Michigan and Pennsylvania. So on the electoral college side and the votes, autos, steel and aluminum are continued going to be a problem

and an aspiration for Republicans and Democrats. And the desperate search for revenue that's been blessed as being okay and patriotic, which are tariffs, that cash flow needs to keep pouring in and they're going to find ways to keep it going, whether you're a Republican or Democrat. So this challenge is not a Trumpian challenge. It's an, the deficit picture in the United States is going to lead to job losses in Canada because of what it means politically and what it means in terms of revenue to the United States. Let me just close this out by telling a little story here. First of all, let me put a couple of numbers in perspective.

The U.S. government is spending $7 trillion a year, and it takes in $5 trillion a year. So it's spending 40% more than it's taking in. Okay, keep that in mind on the one side. In the last week, I can't tell you who it was because there's some kind of Chatham House rules involved in the conference I was at. But I interviewed one of the top financial people in the United States and not government, private sector.

And, you know, I don't understand this stuff like you two guys do, but I did want to try to get from him. What economic indicator makes a difference to him? What does he look at him? Is it look at the unemployment numbers? Does he look at the consumer price index? Does he look at inflation? Like, what is it?

Does he look at the stock market, the bond market? What is he said, none of those. None of those. I don't focus on those at all. It says the only one I look at is a combination, debt and deficit. And the numbers in the United States right now, you know, are brutal, as we've already explained. I said, well, you know, they're pretty high in Canada, too.

He says, come on, that's peanuts. We have the problem. And sooner or later, something's going to happen. You know, we're heading towards a crisis with these numbers. And so that's why we're ending up talking about this today because of what that guy said to me. So I wonder, given that, what you worry about right now in terms of debt and deficit, or deficit on debt, or debt, mainly.

And these are kind of closing comments from each of you who wants to go first. Well, I mean, yeah, I mean, look, the political class are going to be the last people to tackle this issue seriously, because it forces really difficult questions, right, about austerity and health care and transfers and what kind of society are we in? Don't you care about these people? Don't you care about those people? And, you know, six of the last eight federal elections have yielded minority parliaments. Minority parliaments is no place for courageous leadership, I can tell you. It's all about tactical management of the next confidence vote. And people talk about in Canada, like we have the federal budget coming up in about a week's time. But look, you know, people talk about

in glowing terms about the 1995 budget. Well, look, that was a consequence of a number of things, including the IMF knocking on Canada's door and saying you're about to be insolvent, you need to take action. It was an outside pressure point that forced Canada to the table. That's not that John Creighton Paul Martin wanted to do this. They were forced to have to do this,

and they had an opposition that was clamming for it. But they only had the room to do it because there's a clear public sentiment that it needed to be done. And the liberals were on their first majority government, And the block Quebecois were the official opposition who were obsessed with the referendum coming up in the province of Quebec. And you had the Reform Party as a third party in Parliament who are clamoring for deeper cuts and more aggressive action. And the conservative movement, who were the challengers to the liberals, were broken into two pieces.

The Conservative Party had 52 seats and the PCs had two, but they had 19%, 19% in the popular vote. They were perfectly split. So the liberals had a big majority with momentum, with an outside voice and an opposition parties clamoring for it and an official opposition who was out to lunch. and a majority government, then they brought in the 95 budget, then they had two years to kind of rationalize what they did going into 1997, and then they were able to get reelected. And we haven't seen any leadership on the fiscal side, frankly, since then. Stephen Harper, we got back to a balanced budget after the 08 recession

because everything we did was temporary. But still, the size of government grew because we had minority parliaments and we didn't do a lot of things that a lot of conservatives aspired that we might do. So the deficit question matters enormously. and people can, you know, kick the can down the road and say it doesn't matter, debt to GDP ratio and all that. But then when it does matter, it's going to be calamitous and it's going to be really consequential. And you see, and Jerry pointed out, there are voices in the United States, Larry Flinkett BlackRock and others who are finally now starting to make some noise and saying that this is actually a problem. And so some of the conversation is happening down there.

Unfortunately, American politics is captured in a way that it doesn't allow them to deal with this for now. Canada is partly now a victim of this, as I described in the tariffs. side. But there's a Canadian version of that as well. We keep saying it doesn't matter. It does matter. Federal debt and deficit, provincial debt and deficit, household debt and deficit, business debt and deficit, the unspoken deficits that Jerry talked about, about the underinvestment and key things that are going to be catalysts for growth in the future. We have real tectonic problems in our economy. And for the last five years, Parliament has been wrapped up and whether or not we're going to expand the dental program. And, you know, come on. Like, are we going to have

a serious dialogue or not, and I don't think we are. You got the last word, Jerry. Well, look, I share James' long-term concern about this. I guess I come at it from a slightly different angle. I think that we're a country that has grown accustomed to having quasi-European social programs on American tax rates, and that that's going to be really difficult to reconcile over the long term. and my entire career in politics, we've been cutting taxes, right?

And it's been the GST that James did. It's been a middle-class tax cut under the Trudeau government. It was a corporate tax cut, an enormous corporate tax cut, that all parties, even the NDP government, I believe, in Manitoba at the time, was cutting corporate taxes, like Gary Dewar was gutting corporate taxes. And it was all in service of creating a, a productivity bump in the economy that never came. So, you know, I think that what a deficit really is

is an expression on an annual basis. So let's take it over five to 10 years and look at the accumulated debt over those years and X out COVID, because that was an extraordinary moment where the government basically had to keep families on life support. We do not match our level of program spending with our level of taxation. And that's why you have deficits.

Now, there are a bunch of obvious ways to go about rectifying that. I don't think that, and we can talk about program spending until we're blue in the face, it'll be interesting to see the prime minister campaign saying that a 7% year-over-year delta increase in programs, course program spending was unsustainable in an economy that's growing by two and a half. That's obviously true. And he's committed to getting that core spending down from seven to, too. But as James and I both know, having gone through many budget discussions, that's not where the real money is in Canada. And the reason that the Martin Kretchen government, there's a

whole cottage industry of public servants here who will wax poetic about the virtues of program review and how that helped them balance the budget. They balance the budget because they cut transfers from $17 billion to $12 billion. And it compromised the province's ability to and deliver health care for 10 years. And that's where the real money is. So unless we want to figure out a way to deal with those big programs that people rely on, it's we're not going to or raise taxes to pay for them. And we're going to be talking about this until we're no longer talking.

All right. Another fascinating discussion. I know it's a tough one to have and it's sometimes a tough one to follow. as listeners, but I get it. That it's a conversation we should have occasionally. So thank you both. We'll talk to you again soon. Great to be here, Peter. Thank you. There you go. Morebuts, conversation number 26.

Action-packed, that one. Lots of stuff in there. And hope you enjoyed it. We always enjoy hearing from both of them. Thanks for joining us for this holiday season encore episode of The Bridge. We'll be back with the first of our new shows on January 5th. We'll talk with you then.