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Business

Chainsaws and Scalpels: How Governments Choose

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9 minute read

The Audit

 David Clinton

Javier Milei in Argentina, Musk and Ramaswamy in the US.. What does DOGE in Canada look like?

Under their new(ish) president Javier Milei, Argentina cut deeply and painfully into their program spending to address a catastrophic economic crisis. And they seem to have enjoyed some early success. With Elon Musk now primed to play a similar role in the coming Trump administration in the U.S., the obvious question is: how might such an approach play out in Canada?

Sure. We’re not suffering from headaches on anything like the scale of Argentina’s – the debt we’ve run up so far isn’t in the same league as the long-term spending going on in South America. But ignoring the problems we do face can’t be an option. Given that the annual interest payments on our existing national debt are $11.7 billion (which equals seven percent of total expenditures), simply balancing the budget won’t be enough.

The underlying assumption powering the question is that we live in a world of constraints. There just isn’t enough money to buy everything we might want, so we need to both prioritize and become more efficient. It’s about figuring out what can no longer be justified – even if it does provide some value – and what’s just plain wasteful.

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Some of this may seem obvious. After all, when there are First Nations reserves without clean water and millions of Canadians without access to primary care physicians, how can we justify spending hundreds of millions of dollars funding arts projects that virtually no one will ever discover, much less consume?

Apparently not everyone sees things that way. Large governments operate by reacting to political, social, and chaos-driven incentives. Sometimes those incentives lead to rational choices, and sometimes not. But mega-sized organizations tend to lack the self-awareness and capacity to easily change direction.

And some basic problems have no obvious solutions. As I’ve written, there’s a real possibility that all the money in the world won’t buy the doctors, nurses, and integrated systems we need. And “all the money in the world” is obviously not on the table. So the well-meaning bureaucrat might conclude that if you’re not going to completely solve the big problems, you might as well try to manage them while investing in other areas, too.

Still, I think it’s worth imagining how things might look if we could launch a comprehensive whole-of-government program review.

How Emergency Cuts Might Play Out

Imagine the federal government defaulted on its debt servicing payments and lost access to capital markets. That’s not such an unlikely scenario. There would suddenly be a lot less money available to spend, and some programs would have to be shut down. Protecting emergency and core services would require making fast – and smart – decisions.

We would need to take a long, hard look at this important enumeration of government expenditures. There probably wouldn’t be enough time to bridge the gap by looking for dozens of less-critical million-dollar programs. We would need to find some big-ticket items fast.

Our first step might be to pause or restructure larger ongoing payments, like projects funded through the Canada Infrastructure Bank (total annual budget: $3.45 billion). Private investors might pick up some of the slack, or some projects could simply go into hibernation. “Other interest costs” (total annual budget: $4.6 billion) could also be restructured.

Reducing equalization payments (total annual budget: $25.2 billion) and territorial financing (total budget: $5.2 billion) might also be necessary. This would, of course, spark parallel crises at lower levels of government. Similarly, grants to settle First Nations claims (total budget: $6 billion) managed by Crown-Indigenous Relations and Northern Affairs Canada would also be at least temporarily cut.

All that would be deeply painful and trigger long-term negative consequences.

But there’s a far better approach that could be just as effective and a whole lot less painful:

What an All-of-Government Review Might Discover

Planning ahead would allow you the luxury of targeting spending that – in some cases at least – wouldn’t even be missed. Think about programs that were announced five, ten, even thirty years ago, perhaps to satisfy some passing fad or political need. They might even have made sense decades ago when they were created…but that was decades ago when they were created.

Here’s how that’ll work. When you read through the program and transfer spending items on that government expenditures page (and there are around 1,200 of those items), the descriptions all point to goals that seem reasonable enough. But there are some important questions that should be asked about each of them:

  • When did these programs begin?
  • What specific activities do they involve?
  • What have they accomplished over the past 12 months?
  • Is their effectiveness trending up or down?
  • Are they employing efficiency best-practices used in the private sector?
  • Who’s tasked with monitoring changes?
  • Where are their reports published?

To show you what I mean, here are some specific transfer or program line items and their descriptions:

Department of Employment and Social Development

  • Workforce Development Agreements ($722 million)
  • Indigenous Early Learning and Child Care Transformation Initiative ($374 million)
  • Payments to provinces, territories, municipalities, other public bodies, organizations, groups, communities, employers and individuals for the provision of training and/or work experience, the mobilization of community resources, and human resource planning and adjustment measures necessary for the efficient functioning of the Canadian labour market ($856 million)

Department of Industry

  • Contributions under the Strategic Innovation Fund ($2.4 billion)

Department of Citizenship and Immigration

  • Settlement Program ($1.13 billion)

Department of Indigenous Services

  • Contributions to provide income support to on-reserve residents and Status Indians in the Yukon Territory ($1.05 billion). Note that, as of the 2021 Census, there were 9,150 individuals with North American Indigenous origins in Yukon. Assuming the line item is accurately described, that means the income support came to $114,987/person (not per household; per person).

Each one of those (and many, many others like them) could be case studies in operational efficiency and effectiveness. Or not. But there’s no way we could know that without serious research.

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Automotive

Auto giant shuts down foreign plants as Trump moves to protect U.S. industry

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MXM logo  MxM News

Quick Hit:

Stellantis is pausing vehicle production at two North American facilities—one in Canada and another in Mexico—following President Donald Trump’s announcement of 25% tariffs on foreign-made cars. The move marks one of the first corporate responses to the administration’s push to bring back American manufacturing.

Key Details:

  • In an email to workers Thursday, Stellantis North America chief Antonio Filosa directly tied the production pause to the new tariffs, writing that the company is “continuing to assess the medium- and long-term effects” but is “temporarily pausing production” at select assembly plants outside the U.S.

  • Production at the Windsor Assembly Plant in Ontario will be paused for two weeks, while the Toluca Assembly Plant in Mexico will be offline for the entire month of April.

  • These plants produce the Chrysler Pacifica minivan, the new Dodge Charger Daytona EV, the Jeep Compass SUV, and the Jeep Wagoneer S EV.

Diving Deeper:

On Wednesday afternoon in the White House Rose Garden, President Trump announced sweeping new tariffs aimed at revitalizing America’s auto manufacturing industry. The 25% tariffs on all imported cars are part of a broader “reciprocal tariffs” strategy, which Trump described as ending decades of globalist trade policies that hollowed out U.S. industry.

Just a day later, Stellantis became the first major automaker to act on the new policy, halting production at two of its international plants. According to an internal email obtained by CNBC, Stellantis North American COO Antonio Filosa said the company is “taking immediate actions” to respond to the tariff policy while continuing to evaluate the broader impact.

“These actions will impact some employees at several of our U.S. powertrain and stamping facilities that support those operations,” Filosa wrote.

The Windsor, Ontario plant, which builds the Chrysler Pacifica and the newly introduced Dodge Charger Daytona EV, will shut down for two weeks. The Toluca facility in Mexico, responsible for the Jeep Compass and Jeep Wagoneer S EV, will suspend operations for the entire month of April.

The move comes as Stellantis continues to face scrutiny for its reliance on low-wage labor in foreign markets. As reported by Breitbart News, the company has spent years shifting production and engineering jobs to countries like Brazil, India, Morocco, and Mexico—often at the expense of American workers. Last year alone, Stellantis cut around 400 U.S.-based engineering positions while ramping up operations overseas.

Meanwhile, General Motors appears to be responding differently. According to Reuters, GM told employees in a webcast Thursday that it will increase production of light-duty trucks at its Fort Wayne, Indiana plant—where it builds the Chevrolet Silverado and GMC Sierra. These models are also assembled in Mexico and Canada, but GM’s decision suggests a shift in production to the U.S. could be underway in light of the tariffs.

As Trump’s trade reset takes effect, more automakers are expected to recalibrate their production strategies—potentially signaling a long-awaited shift away from offshoring and toward rebuilding American industry.

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Business

‘Time To Make The Patient Better’: JD Vance Says ‘Big Transition’ Coming To American Economic Policy

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JD Vance on “Rob Schmitt Tonight” discussing tariff results

 

From the Daily Caller News Foundation

By Hailey Gomez

Vice President JD Vance said Thursday on Newsmax that he believes Americans will “reap the benefits” of the economy as the Trump administration makes a “big transition” on tariffs.

The Dow Jones Industrial Average dropped 1,679.39 points on Thursday, just a day after President Donald Trump announced reciprocal tariffs against nations charging imports from the U.S. On “Rob Schmitt Tonight,” Schmitt asked Vance about the stock market hit, asking how the White House felt about the “Liberation Day” move.

“We’re feeling good. Look, I frankly thought in some ways it could be worse in the markets, because this is a big transition. You saw what the President said earlier today. It’s like a patient who was very sick,” Vance said. “We did the operation, and now it’s time to make the patient better. That’s exactly what we’re doing. We have to remember that for 40 years, we’ve been doing this for 40 years.”

“American economic policy has rewarded people who ship jobs overseas. It’s taxed our workers. It’s made our supply chains more brittle, and it’s made our country less prosperous, less free and less secure,” Vance added.

Vance recalled that one of his children had been sick and needed antibiotics that were not made in the United States. The Vice President called it a “ridiculous thing” that some medicines invented in the country are no longer manufactured domestically.

“That’s fundamentally what this is about. The national security of manufacturing and making the things that we need, from steel to pharmaceuticals, antibiotics, and so forth, but also the good jobs that come along when you have economic policies that reward investing in America, rather than investing in foreign countries,” Vance said.

WATCH:

With a baseline 10% tariff placed on an estimated 60 countries, higher tariffs were applied to nations like China and Israel. For example, China, which has a 67% tariff on U.S. goods, will now face a 34% tariff from the U.S., while Israel, which has a 33% tariff, will face a 17% U.S. tariff.

“One bad day in the stock market, compared to what President Trump said earlier today, and I think he’s right about this. We’re going to have a booming stock market for a long time because we’re reinvesting in the United States of America. More importantly than that, of course, the people in Wall Street have done well,” Vance said.

“We want them to do well. But we care the most about American workers and about American small businesses, and they’re the ones who are really going to benefit from these policies,” Vance said.

The number of factories in the U.S., Vance said, has declined, adding that “millions of workers” have lost their jobs.

“My town [Middletown, Ohio], where you had 10,000 great American steel workers, and my town was one of the lucky ones, now probably has 1,500 steel workers in that factory because you had economic policies that rewarded shipping our jobs to China instead of investing in American workers,” Vance said. “President Trump ran on changing it. He promised he would change it, and now he has. I think Americans are going to reap the benefits.”

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