Twenty years ago, a fresh-faced Bill Clinton understood that the U.S. people, struggling under a weak economy, thought their future prosperity was in jeopardy. The Clinton Democrats fashioned a campaign designed to tap into that sentiment. The animating idea was summed up in the phrase: “It’s the economy, stupid.”
Today, an even fresher-faced Justin Trudeau has concluded that Canada’s “middle class” struggles under similar apprehensions about their economic future. Trudeau, like Clinton, is trying to define the central narrative of the next federal election on the issue of middle-class economic insecurity. The emerging Liberal campaign message might be reduced to: “It’s the middle class, stupid.”
On the surface, this strategy makes sense. Some 80 per cent of Canadians would likely self-identify as middle class. Rising income inequality and wage stagnation, increasingly high costs of post secondary education, inadequate private and public pensions, and unsustainable personal debt levels all support the notion that Canadians feel economic strain in a way they did not a decade ago.
But in the early 1990s, Clinton adopted the economy mantle not only because he sensed Americans felt insecure financially. The Clinton Democrats also believed then-president George H.W. Bush was perceived to be neglecting the economy in favour of other issues.
That is a big and important difference between the U.S. then and Canada now. Prime Minister Stephen Harper has spent his seven years in office defining his government on its economic-management record. The government’s messaging on the economy has been almost Orwellian in tone and application. The past five Harper budgets have been titled Economic Action Plan. Canadians no doubt get the message.
Objectively speaking, the Harper record on the economy is not bad, especially given the global financial crisis and recession that occurred on this government’s watch. Unemployment is down almost to pre-recession levels, and although economic growth is modest, Canadians probably know that we are doing somewhat better than most other advanced countries, many of which are in recession or on the precipice of recession.
Nevertheless, Trudeau believes he can convince Canadians that the Conservative government has neglected the plight of the middle class in its economic stewardship and that a Liberal government will be dedicated to improving their situation.
Trudeau has given Canadians no idea what a government led by him would do for the middle class. That is reasonable two years out from the election. However, at some point, the Trudeau Liberals will have to put a credible middle-class policy agenda in the window. This will require a conversation about the role of government. It will be a difficult discussion for Liberals, and an easy one for Conservatives.
The prime minister is already talking fluently about his governing record on the middle class. It is a record defined by tax cuts and a limited role for government, both of which are fully consistent with conservative principles. Harper boasted in a speech to the British Parliament in June that since his government came to office the average Canadian family (read middle class) now pays about $3,300 less in federal taxes every year. This is due to a range of personal income tax cuts and GST reductions, plus the introduction of a litany of tax credits. The bulk of the benefits from these tax cuts help the middle class.
Trudeau will therefore have to promise some new and different items for the middle class. Therein lies the problem. Initiatives designed to help a group of Canadians as large as the middle class cost a lot of money.
Trudeau’s middle-class narrative will inevitably run headlong into the fact that many Liberals think fiscal prudence — specifically Jean Chrétien’s and Paul Martin’s deficit-elimination crusade of the 1990s — is their party’s greatest legacy, and that Liberals must be as fiscally conservative as the Conservatives. There will also be a deep aversion in Liberal ranks to even hinting at raising taxes to pay for new programs that might help the middle class, for fear that this will be a political albatross.
Trudeau’s fiscal agenda, therefore, will likely be Harper-lite on deficits and revenue-neutral on taxes. This will put the Liberals in a box that will constrain their ability to advance any meaningful middle-class initiatives to give life to Trudeau’s rhetoric and to contrast his agenda with Harper’s.
In the final analysis, “It’s the middle class, stupid,” might be a campaign slogan Harper warmly embraces.
Eugene Lang was a senior adviser to three Liberal ministers in the Chrétien and Martin governments.
