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How Canada benefits from Biden’s mammoth spending spree

U.S. President Joe Biden followed his US£1.9-trillion pandemic rescue plan with a mammoth US£2-trillion expenditure on infrastructure. He called the latter an investment “unlike anything we’ve seen or done since we built the Interstate Highway System and the Space Race decades ago.”

He’s not exaggerating.

Seizing the opportunity provided by the alarm of the pandemic, he’s moving his country into a bold new phase of big-government activism that channels a good swath of Canadian liberalism.

In putting together the infrastructure plan, Biden officials consulted often with Canada’s Infrastructure Minister Catherine McKenna and her team.

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“Our plan is very consistent with the infrastructure work Canada has underway,” John D. Porcari, co-director for infrastructure planning on the Biden transition team, said in an interview. “We are playing catch-up.”

They’re playing catch-up with Canada on a wide range of initiatives: On child care, health care, assistance to Indigenous communities, climate programs and more.

With the sprawling infusion of infrastructure funds, there are potential dividends for Canada. It stands to benefit, Mr.

Porcari and Canadian officials agree, on electric-car manufacturing, on clean energy exports, on enhanced trade corridors, on cross-border rail projects.

When the big Biden numbers were first announced, there was concern, Ms. McKenna recalled in an interview. “People were like, ‘Hey, Canada, what are you doing in response?'” Not to worry, she counters. “We have already been doing a lot of what they’re planning and they’re doing it in a way that will benefit Canada.”

What excites the former environment minister is that the Biden administration is “looking at everything through the climate lens.” That’s a dramatic change from the Trump administration.

The two governments are now on the same wavelength and what’s more, “We know these folks,” Ms. McKenna said. “These are the folks who are from the Obama years.”

It won’t be all rosy, she cautioned.

Though Mr. Biden is raising corporate tax rates, his subsidies, in combination with protectionist procurement measures, will mean stiffer competition in some domains. Moreover, as Republicans warn, the free spending risks triggering a debilitating round of inflation.

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But the potential gains are promising.

Electrifying the transport sector as per the Biden plan opens up broad possibilities for Canadian exporters, given the country’s competitive edge in the production of required metals, minerals and other materials. It’s a leading manufacturer of electric buses.

The increased demand for clean energy is a potential windfall. The Biden administration wants 100 per cent clean energy by 2035.

At present the U.S. is 40 per cent clean, with Canada at more than 80 per cent.

High-speed rail has been discussed forever, but with the advent of train buff Biden, the possibility of such cross-border links – one line connecting Montreal-Toronto-Detroit-Chicago, the other Vancouver-Seattle – is significantly enhanced, both sides say. The Biden plan provides an unprecedented US£80-billion boost to passenger rail.

Ms. McKenna and her team began consultations with the Americans a year ago when the pandemic struck.

She wanted advice on infrastructure policy during an economic crisis and went to Obama administration veterans who had dealt with the 2008 financial meltdown.

This led to her repurposing some infrastructure funding to the provinces to deal with COVID-19. “They were smart in taking the lessons to heart from what happened here,” said Mr. Porcari, who later welcomed infrastructure policy input from the Canadian side. Mr.

Obama’s infrastructure program totalled only US£48-billion. Mr. Porcari was deputy secretary of transportation at the time.

By comparison to Mr.

Biden’s US£2-trillion, Ottawa is spending about £250-billion on infrastructure, most of it still to come. Given the 10-to-1 population ratio and the dollar-value difference, the comparative outlays are actually quite similar.

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Much depends on how one defines infrastructure – with Mr. Biden, it extends to broadband, public housing, railways, replacing lead pipes, elder-care facilities and modernizing schools.

The infrastructure plan still has to pass Congress.

Republicans argue it’s a Trojan horse for big tax hikes. But with their slim majority, the Democrats will find a way of getting it through. The economic winds are blowing in their favour.

The U.S. imported a record US£221-billion in goods in January, even before the stimulus checks started arriving.

Mr. Biden’s spending bonanza is not over yet. On the way is another trillion-dollar-plus outlay via his American family plan focusing on child care, education and health care.

To no one’s surprise, some of the measures will have a Canadian ring to them.

Joe Biden is a fan – and from the Canadian perspective, that’s a good president to have.

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