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A Clinton presidency may lead to progressive change for North America

The results of U.S. presidential elections always have major implications for Canadians. This time around, we may just see a boost to progressive politics north of the border.

It seems likely that Hillary Clinton will win big over Donald Trump, and that Democrats will also do very well in the Senate and House of Representatives races, perhaps sufficiently well to win control of both houses.

Both Ms. Clinton and the Democratic Party have adopted more left-leaning and progressive platforms than has been the case for many years. This is mainly a result of the Bernie Sanders campaign, which won over millions of mainly young voters to the banner of social democracy, something not seen in the United States since the New Deal in the 1930s.

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Democrats after the election will also likely want to re-connect with traditional working-class supporters by selectively embracing Donald Trump's brand of economic populism. Mr. Sanders and Mr. Trump are hugely different, but both attacked corporate elites for selling out good jobs and spoke to the prolonged decline of the working-class in an era of soaring economic inequality.

The first big implication of a Democratic victory is that growth and job creation in the United States will likely be given a boost through major public investments with important spillovers to Canada via higher exports and the desire to imitate potential success.

Read more: How a Clinton presidency would affect Canada's economy

Read more: Where do Trump and Clinton stand on the issues?

Ms. Clinton has promised a strong focus on public infrastructure, clean energy and environmental transition measures, very much in the spirit of the stimulus program enacted at the start of President Barack Obama's first term. She also promises an ambitious innovation agenda that will involve a major expansion of public programs and not just a one-off fiscal stimulus.

The second big implication is that competitive pressures on Canadian governments to lower labour and social standards to U.S. levels may be alleviated.

The Democrats have strongly championed a $15-an-hour federal minimum wage, which applies in almost all sectors engaged in interstate and international trade. They have also talked about applying a living wage standard to all federal government procurement, and promoting the recognition of trade unions and basic labour rights.

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If these measures are enacted, the frequently invoked argument that higher minimum wages and expanded labour rights in Canada make us internationally uncompetitive will be much less credible.

Ms. Clinton and the Democrats have also promised to raise effective tax rates on very high income earners. Proposed measures include a minimum federal income tax rate of 30 per cent on incomes of over $1-million, a surtax on incomes of more than $5-million, a sharply increased tax rate on short-term capital gains, and the end of the so-called carried-interest provision that treats the employment income of hedge fund managers as if it were a capital gain.

They have also promised a serious crackdown on corporate tax avoidance by the practice of parking assets in low-tax jurisdictions abroad, and the restoration of estate taxes on large inheritances.

If enacted, the room for Canadian governments to expand fiscal capacity and lessen inequality through progressive tax reform will be expanded. The Trudeau government may even be pushed to raise its progressive bona fides by similarly limiting tax loopholes for the rich such as the stock options deduction and the highly preferential rate of taxation of capital gains.

We may also see a significant expansion of public and social services in the United States that would raise public expectations in Canada. Early learning and child care loom large in the Democratic agenda, as does free tuition for students in community colleges and public universities and colleges, and major reductions to current student debt.

The chances of President-to-be Hillary Clinton embracing a progressive agenda are strengthened by close links between her campaign and left-leaning U.S. think tanks. Campaign chair John Podesta is the former president of the Centre for American Progress, and key policy adviser Heather Boushey comes from the Washington Center for Equitable Growth.

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The campaign is said to have closely consulted with well-known progressive economists such as Jared Bernstein, a former economic adviser to Vice-President Joe Biden, and Nobel-prize-winning economist Joseph Stiglitz who is firmly focused on how to counter economic inequality and concentrated corporate power.

U.S. Democrats, like Canadian Liberals, tend to campaign on the left but govern from the right. But there are reasonable grounds to think that Hillary Clinton may yet outflank Justin Trudeau as a leader for progressive change in North America.

Andrew Jackson is an adjunct research professor in the Institute of Political Economy at Carleton University in Ottawa and senior policy adviser to the Broadbent Institute.

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About the Author

Andrew Jackson is the Packer Professor of Social Justice at York University and Senior Policy Adviser to the Broadbent Institute. More

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