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Get handle on deficit, Flaherty warns U.S. Add to ...

Jim Flaherty is appealing to fellow conservative legislators in the United States to get a handle on a budget deficit that Canada's finance minister warns is a risk to the global economy.

"There is a concern about deficit and debt in the United States and a plan to resolve those issues to show a way forward," Mr. Flaherty told reporters in Washington Wednesday. "We think it's important for the world and for Canada that we see a plan in place."

The official reason for Mr. Flaherty's visit to the U.S. capital was to speak at a conference hosted by the Council of the Americas, filling a spot on the agenda that originally belonged to Foreign Affairs Minister Lawrence Cannon, who lost his seat in the May 2 election.

But the focus of the trip is Capitol Hill. Mr. Flaherty is meeting three Republicans who are at the centre of Washington's tense budget battle: Jeff Sessions, the Alabama senator who is the ranking member on the Senate Budget Committee; Spencer Bachus, another Alabamian who chairs the House Financial Services committee; and Wisconsin's Paul Ryan, chairman of the House Budget Committee and author of the Republicans' controversial budget plan that would slash spending by more than $4-trillion (U.S.), including cuts to Medicare, the federal government's health insurance program for seniors.

Mr. Flaherty is stepping into the most contentious debate in Washington.

Treasury Secretary Timothy Geithner says he will breech the government's debt limit in early August, and is imploring lawmakers to boost the borrowing limit to avoid a catastrophic default. Earlier this week, House Leader John Boehner said Republicans would raise the debt limit, but only if the White House and Senate Democrats back spending cuts equal to the amount of the borrowing increase, or about $2-trillion.

Mr. Flaherty said he often gets questions from his American counterparts on Canada's experience dealing with a fiscal crunch. "It's an opportunity for me to talk about our view that we are on the right track, that this is doable" Mr. Flaherty said.

He said he thinks there are lessons for U.S. politicians in the way Canada ended a generation of budget shortfalls in the 1990s.

"I think the recent history of Canada shows we can move from a time of dramatic deficits where the (International Monetary Fund) was eyeing our country and our currency was weak to a time of stability and solidity with a good plan going forward," Mr. Flaherty said. "That's useful generally because we have been through difficult times."

 

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