There was a strange unreality about watching the first U.S. presidential debate between Barack Obama and John McCain.

As the U.S. Congress battled over a potential $700-billion rescue for the country's financial sector, debate moderator Jim Lehrer asked the two candidates again and again what repercussions this huge expenditure would have on each candidate's platform, policies and promises.

Neither McCain nor Obama would concede anything he had proposed earlier in the campaign was now impossible or even unlikely. They are encouraging voters to join them in a dream world of tax cuts and national health-care plans.

The post-election U.S. reality will be a ballooning national debt, rising interest payments on that debt eating away the ability to spend on other programs, deep federal government spending cuts and likely tax increases — the same vicious circle Canada endured in the late 1980s.

Economic evasiveness

It would be nice to think that same sort of economic evasiveness won't happen at this week's leaders' debates as Canada is facing a variety of serious economic issues. Will any of the party leaders tell the truth about the economy in the debates or the remainder of the campaign? Not likely.

Instead we will hear from Harper about how we need a steady hand in unpredictable times while everyone else piles on with assertions that the current economic times are terrible and it's all the Conservatives' fault. A casual observer of campaign coverage so far would think the country is on the road to a depression. 

That's far from true. The economy grew 0.7 per cent in July. Unemployment is 6.1 per cent and just above a 30-year low. Inflation has edged upwards to 3.5 per cent — higher than it should be thanks largely to higher energy costs, but those costs have fallen almost one-third since early summer.

The federal budget surplus is less than a year ago but don't believe the campaign rhetoric that the Conservatives are driving the country into a deficit. After four months of the fiscal year, the surplus was $2.9 billion, down from $6.7 billion a year ago but the surplus for July was $1.7 billion compared to $1.1 billion in July 2007.

The economic questions for the debate and the last two weeks of the campaign are about what's on the horizon. How about asking the party leaders these:

In what specific ways do you see the financial crisis in the Unites States affecting Canada? What will your government do to best prepare the country to withstand the impact and which of your campaign promises will now be impossible to meet?

Despite the election economic hyperbole, the problems in the U.S. will hurt the Canadian economy. We know the U.S. is facing recession and that likely means we will follow, though it hasn't happened yet. Lehrer's question in Mississippi last week is just as relevant in Canada this week and should be asked.

Even in recession, the U.S. will still be our largest trading partner and Democrats still muse about renegotiating the North American Free Trade Agreement. What can we gain from renegotiating NAFTA and what might we have to surrender to get it?

A U.S. recession will likely see demands for protecting U.S. jobs against imports. That puts Canada in the spotlight. An Obama win could easily revive recently dormant demands that NAFTA be reopened so Canada needs to be ready to respond. At the same time, there are growing concerns about lengthy delays at the border shipping goods to the U.S., making it even tougher for our manufacturers to compete. We need to address that once and for all as part of economic discussions with a new U.S. administration.

We've been losing manufacturing jobs in Canada for two decades so is anything different about this slowdown in central Canada? What is the role of the federal government here and how would your government respond?

Manufacturing jobs lost in recent years aren't coming back. A Canadian dollar pegged at 60 to 70 cents US made selling to the U.S. easy. Canadian manufacturers became complacent, pocketing profits instead of reinvesting in modernizing machinery and worker training to improve productivity. Now the economy is paying the price. Add to that the likelihood that at least one of General Motors, Ford and Chrysler will be out of business within the next year. The pressure will be on the next government to rescue companies and perhaps whole sectors of the economy.

How will your government negotiate and implement one national climate change program for Canada?

Liberal Leader Stéphane Dion and Green party Leader Elizabeth May have their carbon taxes. Conservative Leader Stephen Harper and NDP Leader Jack Layton support a cap-and-trade system for large emitters. Either way, all Canadians will pay. What no one is talking about is that we don't have one national system to deal with greenhouse gas emissions and we desperately need it. The economy can't afford the inefficiency and contradictions of 14 different systems.

Answers to these questions would move the campaign discussion about the economy into the real world. It would also help voters decide who can best address the large challenges ahead for Canada.