Amid World's Jitters, Some Fiscal Wisdom From Canada



Saturday, 12 Oct 2013 09:29 AM

By John Gizzi

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Almost exclusively, discussions at the International Monetary Fund\World Bank meeting in Washington, DC, focused on the current fiscal crisis in the U.S. To a person, finance ministers and central bank governors from more than 180 countries expressed concern that a failure of the U.S. to lift the debt ceiling by October 17 would have the effect of a tsunami wave on the world's economy.

Canada's Finance Minister Jim Flaherty was no exception, as he noted to reporters his country's "serious concern over the fiscal challenge in the U.S."

But Flaherty — after more than seven years, Canada's longest-serving finance minister and the senior finance minister at last week's economic summit — also weighed in with how Canada has overcome bad economic times through prudence and lowering taxes.

Asked by Newsmax Friday if he and fellow G-20 (19 countries with the world's top economies and the European Union) finance ministers gave any advice to U.S. Secretary of the Treasury Jack Lew during their closed-door meeting earlier that day, Flaherty said he "was not given to get into specific discussions."

But, he said, "We all recognized the interconnectedness of the world's economies and that failure to resolve the situation will have global consequences."

Flaherty did say that conversations between his colleagues and Lew were "all very encouraging" that the U.S. "was getting to a solution."

But Flaherty went further and volunteered that he had heard from "my Republican friends," that this should not be surprising because "I'm a conservative. That's a good fiscal brand of responsibility."

Since Conservative Prime Minister Stephen Harper took office seven years ago and Flaherty assumed the finance portfolio, the federal portion of Canada's corporate tax has dropped from 22.12% to 15%. In terms of other taxes being lowered under Harper and Flaherty, the average Canadian family saves more than $3,200 a year, according to figures from the Finance Ministry.

The Canadian finance chief spoke proudly of his country "creating more jobs in September" over the previous month and having a "balanced budget for 2015." Because of "precisely what we're doing," he added, "Canada has a triple-A credit rating and is one of three [major economies} in the world to have this rating."

As a result of the policies enacted under the government of Conservative Prime Minister Stephen Harper, he added, "we've had moderate growth and fiscal responsibility. They all affect each other."

Flaherty was also asked what he thought of "quantitative easing" — the policy of central banks such as the Federal Reserve buying specified amounts of financial assets from commercial banks and other private institutions to increase the monetary base.

"I don't like it," he replied, "and I don't like the term 'quantitative easing.' I call it "printing of more money,' because that's what it is."

This policy of "prudence" and "the good fiscal brand of responsibility," Flaherty said, "is where I hope we are all heading."

John Gizzi is chief political columnist and White House correspondent for Newsmax.

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