Flaherty says U.S. needs credible fiscal plan to reduce deficit over time

NEW YORK, N.Y. – Canada’s finance minister says the United States needs a credible medium-term plan to reduce its government deficit over time.

Finance Minister Jim Flaherty also says there needs to be a short-term political agreement so investors can be confident the U.S. economic recovery will continue.

Flaherty’ made the comments in a speech to the Foreign Policy Association in New York.

The U.S. faces what is being called a fiscal cliff — a combination of tax and spending measures that will take effect if lawmakers are unable to reach a budget deal before the end of the year.

The United States is struggling with a deficit that will total at least half a trillion dollars and could tip the U.S. back into recession.

Earlier this week, the Harper government pushed back its target date for eliminating the deficit by one year due to global economic weakness that has carved into commodity prices and tax revenues.