NEW YORK—In a situation he compared to World Wars I and II, federal finance minister Jim Flaherty has every confidence a resilient United States will overcome its so-called fiscal cliff scenario.
Speaking with Canadian journalists following a speech to the Foreign Policy Association in New York, Flaherty said he believes the U.S. can sort its financial situation out before the tax cut schedule expires in the new year.
“I am here to encourage the leadership to move forward with resolution of their so-called fiscal cliff issues,” Flaherty said in his opening remarks.
“We all know that the U.S. is facing challenges on the fiscal front, but as with previous challenges—which include two world wars—I have every confidence that they will overcome these in a way that continues to inspire.”
In his speech to the Foreign Policy Association, Flaherty touted Canada’s ability to overcome its own fiscal challenges over the last five or so years and what he called “the dividends these successes continue to pay in supporting our strong performance.”
Regardless of stories to the contrary, Flaherty sees no benefit to allowing the U.S. to fall from the fiscall cliff come Jan. 1, 2013, nor has he heard support for such a notion in his conversations south of the border.
“I’ve had a lot of discussions with prominent (U.S.) economic leaders (and) not one of them suggested to me that it would be a good idea to go beyond Jan. 1 without at least some temporary agreement,” Flaherty said.
“This is a very serious risk and is not to be taken lightly,” he said. “It will have rather rapid effect on other economies, including Canada.”
While Flaherty didn’t outline a specific threat assessment as far as when a deal should be struck in Washington to avoid the fiscal cliff, he did seem comfortable with the time remaining.
“We’re only in November,” Flaherty said of the timeline leading to the expiration of the Bush tax cuts.
Still, Flaherty said the federal government is encouraging U.S. authorities to deal with it sooner rather than later to avoid what he called “slippage” in both the U.S. and Canadian gross domestic product (GDP).