Flaherty to U.S. lawmakers: Fix your finances, don't disrupt the global economy

Finance Minister Jim Flaherty is in New York this afternoon giving a speech there. Most of the speech would be familiar to many Canadian audiences — he spends a lot of time reviewing Canada's success weathering the recession and then highlights his recent budget.

But Flaherty also uses the occasion to deliver what many on this side of the border will see as a warning to U.S. lawmakers, a warning he made to reporters in Ottawa Tuesday. Reuters Louise Egan reports:

Canada urged its top trading partner, the United States, on Tuesday to steer clear of defaulting on its debt to avoid “disruptions” to the global economy.

Finance Minister Jim Flaherty told reporters he had spoken with his U.S. counterparts in Congress and budget officials in the Obama administration to encourage them to “work something out.”

“This is not just a procedural matter. This has some consequences,” Flaherty told reporters when asked about the possibility of the U.S. missing a debt payment.

“We don't need any more disruptions in the world economy these days,” he said.

Flaherty will head to New York on Wednesday to give a speech there.

His comments came as U.S. Vice President Joe Biden and a bipartisan group of lawmakers stepped up negotiations to find a deal that would allow Congress to raise the debt ceiling by an August 2 deadline, when the United States could start defaulting on its obligations.

With that context, here is a bit from the end of Flaherty's speech in New York today that should, I think, be read in context of the above:

It’s essential that we all have a clear strategy in place to ensure markets continue to have confidence in our fiscal plans—and there is no time to waste in doing so.

The health of Canada’s economy—and of the world’s, for that matter—depends greatly on the fiscal decisions being made in this country.

What’s required is a solid plan to eliminate deficits, reduce debt and create a cushion against the next global economic shock, combined with the determination to deliver results on time and as promised.

It’s a tall order, but it’s doable.

I'm with Flaherty on this one. Someone — and it might as well be their biggest trading partner — needs to talk some sense to the Americans. As I wrote after the last American mid-term elections, the elections that brought the Tea Party wave to Washington:

[Sen. Rand] Paul is quite prepared to lead America into bankruptcy rather than let the federal government borrow another nickel. Paul must surely know that that would be a catastrophic disaster for the United States, Canada and the rest of the world.

But he seems to think his principles are more important.

Dragging the world's economy into the dumpster on principle – any principle – is wrong. He would be doing vastly more harm to America if he uses his new responsibilities and privileges as a United States senator to let the country he loves – and we need – go bankrupt.