Get your fiscal house in order, Flaherty tells U.S. in speech

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NEW YORK — It’s not often a Canadian politician goes to the United States to offer advice publicly, but Finance Minister Jim Flaherty did just that Wednesday, telling a U.S. business audience that Washington needs to get its fiscal house in order.

In a speech to the Canadian Association of New York and a later question-and-answer session, Flaherty said Washington needs to come up with a clear plan to reduce its deficit and balance its budget quickly in order to ensure the health of the Canadian and global economies.

“The United States is a major recipient of Canadian exports. Any difficulties in the U.S. economy are felt in the Canadian economy directly,” Flaherty said.

“The health of Canada’s economy — and of the world’s, for that matter — depends greatly on the fiscal decisions being made here,” Flaherty said.

He added that continued weakness in the U.S. housing market was also a concern.

The message to the New York audience suggested Flaherty was siding with the fiscal hawks in Congress seeking stricter spending controls.

In a copy of his speech released in advance, he specifically named Paul Ryan, the Republican chairman of the House budget committee, who has proposed a controversial plan to repeal President Barack Obama’s health-care law, put hard caps on domestic spending and to limit Medicare entitlements.

U.S. Vice-President Joe Biden is currently leading talks for a budget deficit deal that would help Congress raise the U.S. debt ceiling. Without an increase in the debt ceiling, Washington could default on its debt.

Biden told reporters Tuesday that he hopes there will be a tentative agreement before Congress’ July 4th recess.

Flaherty also commented on two major labour disruptions in Canada — the lockout of 48,000 postal workers and the strike by some 3,800 Air Canada customer service agents and other staff, saying both were hurting the Canadian economy.

“Air Canada is a major carrier in Canada, not only of people, but cargo. So that has a direct economic effect,” Flaherty said, noting moves by the government toward tabling back-to-work legislation.

As for who Canada will support to be the next head of the International Monetary Fund, Flaherty said a decision hasn’t been made yet.

French Finance Minister Christine Lagarde and Mexico’s central bank chief, Agustin Carstens, were “two excellent candidates” for the job that was vacated by Dominique Strauss-Kahn after he resigned last month following his arrest on sexual assault charges.

“We will move forward on that before too long,” Flaherty said.


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