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Hello, I'm Edward Greenspon, editor-in-chief of the Globe and Mail. Welcome to the Globe Roundtable, the most audacious and hopeful political discussion group in the land.

Well everyone is using the word historic this morning. They call the president of the United States the leader of the Free World and so the whole Free World seemed last night to be emotionally invested in the outcome.

Most invested of course were African Americans who voted 96% in favour of Barack Obama. Hispanics, women, low income earners and the young were the other groups that propelled him to victory.

But what does it all mean? And what does it mean that Ontario now is a have-not province? And Quebec Premier Jean Charest is heading into an election. To find out all of those, I'm joined today by Jodi White, president of the Public Policy Forum, a non-partisan think tank based in Ottawa and the former chief of staff to Joe Clark and Kim Campbell. And Doug McArthur, the Distinguished Fellow in Public Policy at Simon Fraser University and a former Cabinet minister in Saskatchewan and deputy minister to two premiers in British Columbia. And John Manley, senior counsellor at the law firm of McCarthy Tetrault and Canada's former minister of industry, finance, foreign affairs and deputy prime minister. And, I might add, officially NOT a candidate for the leadership of the Liberal party of Canada.

John Manley: I wondered how you'd work that in, Ed.

Edward Greenspon: That's going to be my final mention of it for today, John.

John Manley: Good.

Edward Greenspon: So we go to Mr. Obama, president-elect Obama. And you know, I'd like to start here. I mean the turnout last night surpassed Canadian turnout. That's very unusual. One of the things that Canadians have always been smug about, I guess, is that we're more civically engaged than our neighbours to the south.

So what's right about their politics and wrong about our politics that we're heading down in participation and they're heading up? John, why don't you start?

John Manley: Well I think this was a unique set of circumstances in the United States. I mean 20 per cent of Canadians I think in one poll I saw a few months ago would have traded their right to vote in Canada if they could vote in the U.S. election. I mean it's been a very engaging campaign and ah, you know, for whichever side you were sympathetic.

And I don't think our election was seen as a necessary one. It was — there was no mood for change. Usually turnout is higher when the government is being defeated because, you know, time for a change is a force of nature in politics. So I don't think you can — you can make a trend out of one election. I think this was just a very engaging election.

Edward Greenspon: Jodi?

Jodi White: Yeah, I guess I feel a little bit that Canadian politicians get the turnout they deserve. And there has been a cynicism that has crept in and it's not just among the pundits. It is among the politicians as well and I think Canadians get that and are turned off by it.

So ah, and you know, there were probably bits of cynicism in the American one but the American election really was a beacon of hope and people got that and wanted to be part of it and ah it was inspiring. And so the difference between the two is quite profound I think.

Edward Greenspon: Doug, does it just seem to people that that election mattered more than the election we had in Canada?

Doug McArthur: No, I think you had — you had three things in the U.S. that really contributed to this turnout and to this result. One, Obama was inspirational and he did provide real hope to a lot of people. That was something that we didn't have in our election and haven't had for a long time, that kind of inspirational hope that Obama presented.

He's a very unique character in that respect and speaks to those issues with a conviction and with a sincerity and with an ability to inspire people that's quite remarkable. And that drew people out. The second thing was organization.

He had in terms of organization just a remarkable organization. The kinds of things, innovative things he did in terms of organization is fundraising. The troops on the ground, his people on the ground, his voluntary force of workers out there, including right on to election day, made a big difference and including in registration, but on election day.

And the other thing of course was George Bush. I mean really George Bush is close to one of the most unpopular presidents ever and Obama was able to run on the basis that he would do things differently compared to George Bush. So those three things together provided a unique set of situations in the U.S. that we just don't match here and didn't match here in our election and haven't matched for a long time.

It's really interesting. For a good part of this decade Canadians were rather smug about how we were able to manage our affairs so as to have the effective government and avoid many of the pitfalls that the U.S. have got into.

And yet, as John has mentioned, more recently we all looked to this result in the United States which is truly exceptional, compared to our situation.

Edward Greenspon: Well perhaps there are problems that we've been too successful. Jodi, is that possible?

Jodi White: We've been too successful with what? Sorry.

Edward Greenspon: Well in policy terms. In not having the huge problems that would move politics on to a higher plane

Jodi White: Well, I mean if we haven't had all of the problems of the United States which is of course, if you don't use the word super power, it is THE power in the world. So of course we can't compare.

But, you know, if you look at our past election, you know, climate change and the environment is a big issue and it was virtually wiped off the agenda of discussion through ah, you know, by one party putting up an idea that was ah, you know, repudiated by the others.

Health care, we've still got huge problems in our health care system that we're not dealing with and admitting. And it was virtually not admitted in the campaign. So it's not that we've got everything right. I do think we had an election which didn't address the issues that are there and didn't seem to have any reason for being called. It's discouraging for everyone I think.

Edward Greenspon: Doug, you said, you know, you described Obama in terms of ah the first point you made, whose unique abilities to inspire, to bring hope to people, obviously those created huge expectations. Do you worry about those expectations and what would you do if you were advising him to manage that ah, that issue?

Doug McArthur: Well I don't exactly worry about the expectations. I think that as part of the hope and inspiration type of message and his ability to convince people that there is a real chance for America to be the kind of nation he spoke to, I think if you're going to have that kind of — that kind of message, you're going to get expectations.

But if you look at his program, you know, his program is progressive, broadly progressive and ah sets out some aspects of change that would bring improvement along the lines you talked about. But he doesn't talk about radical change so he's already in setting out his program in some detail, tried to set out the expectations in terms that are pretty practical and achievable.

He also communicates a sort of sense that he's a problem solver, that he's not radical, that you can't — that you shouldn't expect that he's going to do dramatic things. So I think that ah, that there won't be too much difficulty. There will be some clearly but I don't think there will be too much difficulty because he does speak in terms of gradual change.

He's going to have some of his own Congressmen to control who are going to have high expectations and that may create some problems. But again, I think they've seen the excesses of the past, particularly in terms of Republicans and they're going to try to avoid that. So I see a period in which he's going to enter into a dialogue with Americans, talk about the long term, the difficulty of taking quick and direct action and he's going to talk down expectations. He is so convincing that I think he's going to be quite successful at managing these expectations.

Edward Greenspon: John, I mean people seem so emotional about — they have so much hope. The Bush years are over, particularly among Democrats, that can Barack Obama live up to Barack Obama?

John Manley: Who was it that said that we campaign in poetry and we govern in prose. This will be truly the case ah with this new administration. They face very daunting challenges starting with the economy, proceeding through U.S. foreign policy which is surely in tatters after — after the Bush years.

There are — there are a lot of things that need to be addressed and they need to be addressed fairly quickly. And ah, at the end of the day Barack Obama is human and he's going to have — he's going to have his problems. He has amassed a fortune in political capital. I guess he starts spending it today. And ah he's going to have to make choices about where ah, where he allocates that — that capital.

I don't know that the expectations are going to defeat him. I think that the challenges he faces are widely recognized by Americans to be overwhelming ones and ah, and the question that he will put to Americans I expect four years from now if he runs for re-election is: are you better off today than you were in 2008: And if he can make progress on that measure, ah he will be seen to have been a successful president.

Edward Greenspon: If the answer to that question is no, we'll all be in a lot of trouble I guess because the economy is (overlap)…

John Manley: I think that's absolutely right. And I mean the markets don't often reflect emotion an this morning futures on the DOW were down about 100 points. The TSX opened down this morning. I think we've still got a long way to go to get through to the end of the economic issues that confront us.

Edward Greenspon: Jodi, I don't know precisely how to ask this so I'll as it I guess insensitively in a way. But he is the first black president of the United States. For a lot of people who've broken barriers, who have been the first and there was some discussion among this last night, among some commentators. There is a higher expectation of you. I mean certainly, you know, Jackie Robinson broke the colour barrier in baseball and he had to be so much better in order to have the credibility, if you will, to do that.

Do you think that more will be expected of Barack Obama?

Jodi White: I find the expectation issue quite interesting because there's no doubt they are very high, although he also exudes an enormous humility and did that throughout his speech last night. I mean in terms of how he sees himself and he does see it as more of a movement than him alone and that is very positive obviously for what's going to happen.

And probably his — the last night was the peak and now all of the problems start to come. So it will be his bringing people in and getting them to work with him. But all of the signs are that, you know, he has a great ability at doing that and the expectations will be high and he's going to have to address that. And you know, I mean John McCain was enormously gracious last night too.

Where the Republicans will be, they aren't going to always be gracious. They were probably their most gracious last night. And so where that leads to, there will be challenges there. But you did see — it's a little — I'm very anxious about making it all sound like it was so wonderful just because it just seems to add to the pressure on him and no one person is super human and he is not super human. And I think he seems to know that most definitely.

He's going to have to — he's going to make mistakes and people will just have to be there and make some judgements on him in that way. But a lot of the signs are, as I say, when I was struck with the humility that exudes and I think that is a great feature of a leader as well, frankly.

Doug McArthur: Ed, I think — I just would make the comment that he got black support because he was a black man. But he did not get black support because he promised over-the-moon for the black people. His program was not really a commitment that set any high expectations for what he would do with black people and I think — for black people and their conditions.

He talked broadly about reform and change. So I don't think he's going to face the kind of perhaps what people think, some people think the kind of high expectations that he's going to bring dramatic change in terms of civil rights or anything of that sort.

The other thing is that one of the groups that people worry about are the younger people and perhaps the young — and women voters and what they will do if he doesn't deliver. But remember, he's almost certain to be successful in Iraq. He's almost certain to be able to withdraw from Iraq. That's going to be a marker.

He'll get that done in the first two years. That's going to be greatly to his credit and I think help to alleviate that cynicism that a lot of people worry in general might result.

Edward Greenspon: Okay. I'm sorry, does anyone want to cut in there? No? Okay, let's talk to Canada's national interest for a moment. We have a Democrat in the White House. We have this Democrat in the White House. We have a very strong Democratic Congress in both houses. So what differences do we expect, John, that that's going to make to Canada?

John Manley: Well, you know, our challenge is always how do we get on the agenda in the U.S. and because the agenda in Washington is crowded by domestic issues. And if there are 160 countries in the United Nations, every one of them has some strategy for trying to get some oxygen in Washington. And so we compete with everybody else and with domestic issues. It's challenging.

I think there are a few things that we'd want to watch. First of all to engage the U.S. we have an enormous opportunity based on the investment that we've already made in Afghanistan. The problem with our approach to the U.S. is often that we think it's all about the bilateral issues and we've got to talk about, you know, what's happening at the Windsor-Detroit border today.

When we can engage the U.S. by being part of the solution for a global issue, we gain a lot more credit to use on other more bilateral issues. Our investment in Afghanistan is significant in lives and cost. The new president has made it pretty clear that he thinks the U.S. should be out of Iraq and in Afghanistan.

I think we ought to start building on some of that credit and we should be ensuring that our investment pays off because we're part of the solution for one of the problems that Barack Obama is going to face.

Edward Greenspon: Does that put pressure on us to revisit the question of withdrawing in 2011 from Afghanistan?

John Manley: I think first of all we should wait and see how this all unfolds. I've spent time at the NATO table. The NATO, you know that for roughly the last year George Bush has had no clout. And with all of the effort that went into trying to get other NATO countries to engage more earnestly in Afghanistan, nobody was going to do that for George Bush.

In fact, I expect there are countries that are now ready and waiting for Barack Obama's request because this is how the world works. The world will want to suck up to the new U.S. president, to put it bluntly.

And when his issue — I mean he will be briefed on what great things Canada has done and how many casualties we've had and all of that and he will express his gratitude to Prime Minister Harper, undoubtedly in their first phone call.

But his problem is not what happened before. His problem is what comes next. And if in his Afghanistan policy we become part of the problem rather than part of the solution, we run the risk of squandering the potential benefits of all that we've done.

So if I were asked by the Prime Minister for advice on this again, I would say, you know, you've made your point. I wouldn't harp on that. I'd wait and see how this all unfolds. See what the new President's commitment is and see what other countries are willing to do. There may be a way that we will be engaged there longer.

Jodi White: I agree with John when he's saying that using other issues than our bilateral issues are going to be important. And in fact, I think the challenge — it's interesting, for all of Canada now we don't have Bush to kick around anymore. And Canadians have been quite happy to be in that mode for the last 4 years or longer in terms of our attitude about Canada-U.S. relations.

And all of a sudden now the challenge is to say, okay, well now — because he's gone — now what do you think of Canada-U.S. relations and what do you want to do about it? And that challenge is there for the government as well. And I'm quite sure they've been thinking about it a lot in terms of Harper has been somewhat distant from the Canada-U.S. relationship in many ways, primarily probably because of Bush. So he too has to rethink where he wants to play. And I agree with John on Afghanistan as one and I think there's some other international issues like the Americas and nuclear non-proliferation and some others where we may be able to get in on it.

And I also actually think that things like the signal on Jim Prentice in Environment may be also part of this. I mean Harper will know that the U.S. stand on climate change is going to change, was going to change with whoever won, frankly. And Canadians will be watching that carefully and will be a little bit likeminded on that. And the Harper government is going to have to decide what it wants to do on that. And I think the move of someone who is more clearly right at the nexus of energy and environment issues, because he comes from Alberta, is probably one of what they thought about when they made that change.

Edward Greenspon: Doug?

Doug McArthur: Well first of all, let me — we got on to Afghanistan a little bit. I disagree I think with what I'm hearing about positioning in relation to Afghanistan. I think the worst thing we could do is show we're wobbly, that we're not sure about it, whether or not we're sticking with the commitment.

One of the things in my experience with the U.S. government is be clear about what you're doing and if you start wobbling and start showing indecision, they both are opportunistic in that respect but you also lose respect. And this mission has got all kinds of problems.

I think for Canada to start signaling that maybe we would reconsider this depending on what happens would be a big mistake. But more generally I think one of the things we're not talking about here is the other election in the U.S. and that is the Senate and the — and the congressional election for the House of Representatives.

If Canada is going to be harmed by the outcome of this election, I don't think it's going to be harmed by Obama. Obama is not going to probably do very much that would be to a disadvantage of Canada directly. But on some of these issues of trade and so on and the use of the countervail which is a very strong weapon that the Americans tend to use, a lot of that action, as we've seen in softwood lumber and other things, initiates itself in Congress.

And a lot of people are concerned that this Congress may be much more protectionist and that Canada may end up being the target of that sort of thing. I'm not totally convinced that that's the case. But if we are going to suffer harm then it's going to be through I think primarily through actions that originate and are motivated by the electoral interests of those people in Congress. And that's where I would be spending a lot of time, if I were in the Canadian Embassy over the next little while.

Edward Greenspon: One of the places that obviously — and I'm going to switch gears here a little bit but one of the places that would experience harm potentially because its economy is so integrated with the United States is Ontario. And Ontario has been on an economic downswing for a while, thanks to a number of factors.

This week we learn that what we knew was coming but is official. Ontario is going to be a have-not province. Ontario is going to receive equalization. Not huge amounts but receive equalization. It's quite a moment in the evolution of this federation I think.

Doug, from British Columbia how does that look that Ontario is going to be receiving equalization payments?

Doug McArthur: Well, looking at it from out here, I think a lot of people think this is a dramatic change in ah, in relative relationships in the country. That what's happened here is we're seeing central Canada move into a situation where they're no longer the dominant player and that we're seeing something dramatic happening here.

I half agree with that. What we're seeing here is structural change in the Canadian economy. There's no question about that. The manufacturing base, and particularly the auto industry that's been a good part of Ontario's success, is probably in long term decline although this is something that also the Canadian government should be trying to work with the American government on to try to stabilize this to some degree.

But the — the industrial base of Ontario is in long term decline. And so part of what's happened here is that this has been reflected in lower incomes, both corporately and personally land lower spending and so on in Ontario and that feeds through to the equalization formula.

Of course the other lesson in this is for the past 3 or 4 years if you don't have commodities in Canada, you're not going to be part of the haves in Canada. And so we're seeing the rise of Western Canada and that is one of the factors that's pushing Ontario into this position of being a have-not province.

I think in that regard, perhaps British Columbians in particular are a little bit smug about this. They don't quite understand that commodity booms are in fact cycles. And what we're going to see is a feed through of the past 2 or 3 years through the equalization program. But will that last? Well I'm not so sure. We're seeing gas and oil prices dropping. Maybe we're going to return to a position where commodities aren't quite as prosperous as they have been and that will feed itself through and it will see maybe Ontario moving off equalization in 3 or 4 years.

Edward Greenspon: John, how did Ontario get to this point? You were minister from Ontario. You grew up in Ontario. Ontario was the have province of Canada. What has happened?

John Manley: Well I think Doug's quite right. What we've seen is a decline in the manufacturing base. I do think, though, that use of words like have and have-not are rather misleading. Equalization is a formula which averages the fiscal capacity of the provinces and compares each province to that average. And nobody in Ontario is going to wake up one morning and feel poor because they are now below the average instead of being above it. They won't notice the difference at all.

It is a big difference for the program itself because Ontario is such a big part of the equation that you know, Minister Flaherty is right to question how sustainable the program is in its current form if Ontario becomes a recipient. But this is mathematics. This isn't policy. The truth is, whether it's Ontario or whether it's Michigan or Ohio or Pennsylvania, the industrial heartland is in decline. And the average is affected by the strength of provinces like Alberta and Saskatchewan that are resource rich and even Newfoundland will become one of the provinces that's above the average so —

Edward Greenspon: But is it political sustainable to ask Ontario, to have Ontario to recycle several billions of dollars of money, both through equalization but also through other types of programs to the rest of Canada when it is below that fiscal average, that (overlapping)…

John Manley: No, I mean the formula is going to have to be adjusted to become something that's affordable. Remember this. Another misconception is that somehow or other this is money out of provincial budgets. But the equalization program is a federal program. So when you say it's Ontario money being recycled, yes Ontario taxpayers are contributing something around 45% of federal government personal corporate income tax revenues. And to the extent therefore that equalization is a federal program, then a percentage of that is coming from Ontario taxpayers. It's come from other taxpayers also. But it's a question of the sustainability of a program that would, according to the current formulas, become so expansive that it eats up too much of federal budget to be able to continue.

I think the principle of equalization is a sound one. But it's one which is premised on particularly Ontario being the beneficiary of the economic growth of other regions of the country as it was for that first century and more of our history when the tariff walls and starting with the national policy of John A. Macdonald made Ontario the beneficiary. That's all changed.

Jodi White: But it seems to me this proves that the equalization program works and is right. I mean no economies are permanent and this is moved around Canada. I would think now probably every province at some time has been a beneficiary. And I mean the Ontario amount this time is equal to the PEI amount. So we're not talking about a lot of money.

And as John says, I mean who would have thought 15 years ago that Saskatchewan and Newfoundland would be on the have side of this strange have, have-not phrase that we use, which I do find a little odd in a country like Canada that we have have-nots. Most of the world would not accept that as a term.

But it seems to me that this is proving — because economies do change and especially resource based economies because of booms, etc. And that in some ways, I mean there are problems on the sustainability of it. There's absolutely no doubt about it and when you add health transfers and other things to it, we've got huge sustainability problems in the future.

But it seems to me what's happening in Ontario right now is proof that in fact this system works and was designed in the right way.

Edward Greenspon: Okay. Equalization works. And Doug, I know you want to come in here. But I guess the question I'm wondering is, is political sustainability (unclear) some ways. You know we've had three successive — we've had a Liberal government and now we've had a Conservative government. Before that we had an NDP government before then in Ontario, all saying that Ontario is getting a raw deal and putting forward a case for fairness that's never really caught on.

Maybe this will be the symbol that turns Ontario into a region, I don't know. Doug, you wanted to comment.

Doug McArthur: Well, yeah this question of whether the system is unfair to Ontario is a complicated question and John has pointed out some of the realities of the system. But I do think you're asking an important question about political sustainability.

For a long time and on many occasions we worked on the basic assumption — and it has been structured into the formula on occasion — that Ontario would never be a province that would receive equalization, simply for the reason that it was seen as the base of the Canadian economy and we used it as the base and we compared everything against the Ontario base.

That sustained the idea, the political idea that Ontario was the place where everything emanated from and it was the core and the heart of Canada. And what this is doing in some ways is challenging that assumption. And it's not because the formula is failing per se, but it really upsets people's notions of the country.

And so, first of all it may be advisable in terms of political reality to return to a situation where Ontario is just — is more the base and not ever a receiving province. That's not particularly hard to do. But what's interesting about this is this government so-called reformed the equalization program to put it on a sustainable basis at a time when all of this was foreseeable and made a great political deal out of the fact that this was a new sustainable and continuing equalization formula.

Now their own design is being referred to as needed to be redesigned because it's failing because of the cost, including now blaming — in some degree the suggestion is Ontario is part of the blame for the cost which is, as Jodi has pointed out, it's nothing. The amount of money that's going to Ontario is nothing.

But now we're back into a new found of federal-provincial relations where the fiscal transfers are once again back on the table. We're going to have arbitrary caps put on equalization. I think this is a major failure of Mr. Flaherty and this government and needs to be talked about.

Edward Greenspon: I've got a prediction to make here which is the equalization issue is going to be so inspiring to people that the turnout in the next election (laughter from group) will be huge.

Jodi White: Eighty percent.

Edward Greenspon: Speaking of elections, let's just flip very quickly over to Quebec for a minute. Jean Charest is going to the polls. He's had a minority government. He had a kind of stinging minority government last time which saw the Action Démocratique party come from very little to official opposition and almost form a government and now they've receded.

The last time we had a guy with a minority government, thought he was going to get a majority, it didn't quite work out that way with Stephen Harper. I'm just wondering if you guys think this is a well calibrated risk, a good piece of timing by Mr. Charest. Jodi?

Jodi White: Well I mean I'm not seeing all of their polls. His poll numbers have been very high. And I do think he too is looking at the future on the economic situation as Stephen Harper did and thinking that it is probably going to get worse. And he may even be thinking that the swell of enthusiasm about Obama and the positiveness coming out of that could be useful. And the Action Démocratique is weaker. I mean minority governments have the right to decide when to try to get a majority and there are certainly some people who are looking at this and are a bit astonished at it. I think he's wanted to go this Fall for quite some time and sees it as an opportunity. And so we'll see if it works out for him.

Edward Greenspon: John, do you think we're going to hear a lot more demand from the rest of Canada in the course of this election?

John Manley: Oh of course. That's part of the nature and it relates to the previous conversation about equalization. When I was the finance minister I of course relied on Ontario to back me up in defending me against demands from other provinces for enrichment and equalization because Ontario always wanted the transfer payments, which are largely per capita, to be increased rather than the equalization.

Quebec got it both ways because they were a large province, therefore they did very well on per capita transfers. They also did very well on equalization. They got it both ways. I think you can expect that there will be — there will be, you know, more statements of demand. Mr. Charest has very successfully done what most Quebec politicians do which is to position himself as being a demander on behalf of Quebec.

And while he certainly is strongly committed to Canada and opposed to the separatist notion, his case is basically that Quebecers do better — it's the great bargain — they do better as part of Canada because they can negotiate effectively with the rest of Canada. So I think you'll see that as the campaign unfolds.

Edward Greenspon: Doug, we'll end with your thoughts on the Quebec election.

Doug McArthur: I agree with that but I think this election is happening for one reason and one reason only. And that is that the numbers show this is a chance to put the knife into the heart of the ADQ. And that's what Charest is about to do. The ADQ has stumbled and fumbled. They really upset the balance in terms of the two major parties in Quebec in the last election. And now is the time when they probably can't recover and this issue of who will position themselves as a defender of Quebec will be defined in terms of trying to show that Liberals are better than the ADQ on this.

But more generally, what Charest is going to do is he's going to drive the ADQ back down to a traditional low number of seats minority party. And if he gets a majority out of that, which he probably will, that's all to the good. But he needs them out of the way. They are the biggest threat to the Liberal party that the Liberal party has seen in Quebec for years. And now is the time to do them in.

Edward Greenspon: I guess a common cause for both the Liberal party in Quebec and for the Parti Quebecois on that score.

Doug McArthur: Absolutely.

Jodi White: Mmm.

Edward Greenspon: Okay, John, Jodi, Doug, thank you very, very much for your insights today. If I ask you to come back next week would you all say in unison: yes we can?

John Manley: Yes we can.

(laughter)

Edward Greenspon: Excellent. Talk to you then.