Prime minister cautions unforeseen consequences if US falls off fiscal cliff

Harper tells business forum US won’t reach economic heights from a decade ago.

November 20, 2012   by The Canadian Press

OTTAWA—Prime Minister Stephen Harper says if President Barack Obama and US lawmakers can’t find a solution to the looming fiscal cliff, it could spark other unforeseen economic woes.

Harper told a Canada-US business forum in Ottawa on Monday that he hopes “reasonable people” can come to a solution now that the election south of the border is over.

“To the extent I hear some people talking about a bungee cord, I think that kind of talk is foolish,” Harper said. “If you go over a cliff, you can’t be sure what will happen next. Like we saw with the collapse of Lehman Brothers, how a single major event can trigger a series of events that’s very hard to pull back from.”

The fiscal cliff refers to the combination of imminent spending cuts and tax increases due to take effect Jan. 1 that could push the fragile US economy back into recession, dragging Canada’s along with it.

Harper also lauded American entrepreneurship, saying it would be the driving force that would one day allow the world’s largest economy to overcome its current economic problems.

But not, he added, without some government support.

“This is still at its heart, the most entrepreneurial, dynamic, developed economy in the world,” Harper said. “My sense is that if it could be given any kind of stability, not just for the next two months, but for the next few years that the energy of the business community in the US is just looking for the opportunity to get growth going again.”

Harper said he doesn’t think the US economy can reach the heights of a decade ago, but it can improve over the situation of the last few years of the economic downturn.

Concerns began to ease Friday after Obama met with congressional leaders. Republicans and Democrats emerged striking a noticeably more conciliatory tone.

“I am confident we can get our fiscal situation dealt with,” Obama said Sunday.

Added Harper: “I know most of these people. They should be able to come to some kind of agreement of what to do about Jan. 1.”

©The Canadian Press

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