Straight Talk
DAVID AKIN - As US crisis looms, Harper pushes 'farther, faster' on India trade

PM Stephen Harper and wife Laureen pose for the media inside the Sri Someshwara temple in Bangalore Nov. 8, 2012.

Credits: REUTERS/Danish Siddiqui

DAVID AKIN | PARLIAMENTARY BUREAU CHIEF

BANGALORE, India — No one could have predicted or planned for the fiscal crisis of 2007 that plunged the world and Canada into recession.

But there is a looming fiscal and economic crisis for which we can, in fact, make plans because we know precisely when it will occur and how it will be caused.

It will begin on Jan. 1, 2013. It will be caused by the failure of Democrats and Republicans to agree on a budget deal, triggering automatic sharp cuts in federal government spending combined with automatic tax hikes. That combination could be lethal for the still-struggling U.S. economy and will almost certainly sicken our healthier Canadian economy.

Can we avoid this crisis? Only if Democrats and Republicans can agree on a new budget deal.
Before the election, any budget deal seemed impossible.

Is it now any more likely? It's the same guy in the White House, the same Democrats in charge in the Senate, and the same Republicans running the House of Representatives. So, no, it's hard to think Washington is all of a sudden fixed because of Tuesday's election.

So since we know there's a good chance that the new year brings with it an economic slowdown, what can we do in Canada to prepare for the hurt we know is likely on the way?

"The government, as best we can, does always look at contingency plans for these things," Prime Minister Stephen Harper said when I asked him this question Thursday in Bangalore.

But that's all Harper will say. Canadians might like to know what's in those plans but he's not saying.

In any event, if we are heading for a slowdown in less than eight weeks, isn't it probably about time to start putting those contingency plans in place? If Ottawa is going to raise employment insurance benefits, set up another stimulus program or cut taxes to boost more job-creating investments, it takes time to do these things.

Finance Minister Jim Flaherty should have some news about this when he delivers his fall fiscal and economic update but he's holding off tabling that as long as possible until he sees how things will play out in Washington. The decisions made or not made in the Capitol could have a huge impact on Flaherty's revenue and deficit projections.

In the meantime, Harper, from his hotel room in Bangalore, lobbied President Barack Obama Friday during a 10-minute congratulatory telephone call to do whatever it takes to pull America away from the fiscal cliff.

"Obviously we encourage President Obama to work to bring Congress together on a resolution of this issue," Harper said dryly Thursday.

Harper might want to get on the blower with every Republican and Democratic leader in Congress as well with the same message.

In the meantime, Harper quite rightly is focused on re-calibrating Canada's trade relationships so that economic shocks in the U.S. don't hurt as much.

That's one of the major of themes of the trip to India that wrapped up Friday. India has 1.2 billion people and a trillion-dollar-a-year economy that's growing two or three times as fast as Canada's. And yet Canada and India do only $5 billion a year in two-way trade. It's a trivial amount, equal to what Canada and the U.S. will trade between next Monday and next Friday.

When he took over in 2006, Harper recognized that the Canada-India relationship had been "a frozen file" for too long. But despite his enthusiasm for ramping up trade relations with the world's biggest democracy, there's been little to show for it.

"There is a frustration it's not going far enough, fast enough," Harper said in Bangalore. "This is the government that's placed the greatest emphasis on developing bilateral relations between Canada and India of any government in history.

"I think we need to go farther and faster."

Sun News Videos

Feminist 'consent underwear' spark debate

Do consent underwear just change the conversation from 'rape culture' to 'slut culture'?


Afghanistan's upcoming election

With an election rapidly approaching, change is on its way to Afghanistan. Good or bad, the world is watching.


Is pedophilia a sexual orientation?

The American Psychiatric Association wanted to call pedophilia a sexual orientation, but is now back-tracking.

Ezra Levant’s The Source is the most provocative and thought-changing multimedia show in Canada.

This show is 100% focused on the political battles taking place across Canada, in the United States...even around the world.

Michael Coren brings you strong, balanced opinions to challenge conventional thinking.

Byline brings you the stories you won’t hear anywhere else while exploring points of view that are all too often ignored.