Jim Flaherty didn’t need another reminder of the looming economic mash-up south of the border, but as he headed to a gathering of financial leaders in Tokyo, the International Monetary Fund gave him one anyway.The IMF cut its global growth outlook, reported that citizens worldwide lack confidence in politicians to fix the mess, downgraded its prospects for Canada and laid much of the blame at the doorstep of the U.S.
Our neighbour is already dealing with a $16.2-trillion national debt, a looming “fiscal cliff” at the end of this year, stubbornly high unemployment and the slowest economic recovery of the post-war period.
Tuesday, the IMF reminded Canadians that our growth has been slowed by the U.S. economic malaise with a frightening spillover ready to hit this country from the mandatory tax increases and spending cuts that could cut four per cent from American gross domestic product next year.
But first, a presidential election on Nov. 6.
The U.S. presidential race is always more than just a spectator sport for Canadians and their governments, but the deadlocked race between Mitt Romney and Barack Obama will have an impact on everything from economic growth to energy policy in this country.
Canadian legislators, past and present, know enough not to tip their hand on a potential victor, but they have not been short on advice.
Flaherty has said whoever wins next month must demonstrate bold leadership because they will have to work immediately on the deficit and start to slice the historic debt.
If the so-called “fiscal cliff” is not avoided, Canadians will take another hit, not only because consumer confidence will plunge on this side of the border, but because there will be an inevitable dip in exports to our largest trading partner.
“If it is not dealt with, the effect on U.S. GDP will be very significant and that of course directly affects Canada,” Flaherty recently told The Globe and Mail.
Obama inherited a debt problem — the last surplus in the U.S. dates back to the Bill Clinton years — but it has grown by $1 trillion per year under his watch and has risen 52 per cent since his inauguration, currently growing by $2 million per minute.
The tough-love prescription to deficit and debt executed by the Jean Chrétien governments of the 1990s is being offered to Americans.
Last month, former Prime Minister Paul Martin spoke at the American Enterprise Institute and told an audience the U.S. is at a tipping point.
He said the two presidential candidates had to be brutally honest about what lies ahead if the government is to be serious about deficit reduction — something that has to be dealt with the day after the vote.
Martin, who slew the Canadian deficit in the ’90s, spoke at the launch of an e-book by Brian Lee Crowley of the Macdonald-Laurier Institute and consultant Robert Murphy that advises America to cut deeper than either of the major parties have dared to go and then reap the accolades from a thankful electorate.
“The single most important lesson to draw from the Canadian success is the need for sharp and immediate spending cuts,’’ they write inNorthern Lights: Lesson for America from Canada’s Fiscal Fix.
The Canadian experience has drawn the attention of Republican vice-presidential candidate Paul Ryan, who has spoken supportively of the Harper government’s corporate tax cuts.
The Obama campaign was buoyed by last Friday’s jobs numbers, showing the U.S. unemployment rate finally dipping below 8 per cent. It stands at 7.8 per cent, exactly where it was when Obama took office.
According to factcheck.org, all 4 million jobs lost under Obama’s watch have been recovered — and another 325,000 new jobs created.
Consumer confidence is up, but real household and family income is down 5 per cent each, and there are 6.4 million more Americans living in poverty than when he took office.
There are 46 per cent more food stamp recipients than when Obama took office.
The non-partisan, non-profit website says more recent poverty numbers from 2012, not yet available, may paint a better picture.
Obama regularly wins the “Canadian primary,” his popularity in this country far outstripping his support in the country he governs.
Stephen Harper once basked in Obama’s post-election glow on a frigid Ottawa day in 2009, but given the natural alliance between Republicans and Conservatives and the fear of a U.S. economic implosion, he might be wishing for a Romney visit in January 2013.
Original Article
Source: the star
Author: Tim Harper
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