Monday, October 06, 2008 Canwest News Service

"There's nothing on the horizon - notwithstanding the storm clouds, and they are significant - (that) indicates to me that we should immediately go into deficit," Harper said in an interview with the Business News Network, when asked to comment on the notion of using deficit spending to stimulate the economy.

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"I know economists will say we could run a small deficit, but the problem is that once you cross that line, as we see in the United States, nothing stops deficits from getting larger and larger and spiraling out of control. And we want to avoid the kind of government, household and trade deficits we've seen in the United States," said Harper.

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"But understand that it is these savings that we are worried about. I can tell you, I can tell you I worry. What I worry about my friends, is that this is just the tip of the iceberg if we get a carbon tax on energy or if we get the tax increases the opposition wants to impose on our economy to pay for spending promises we can't afford."

Earlier Monday, Harper said the government is considering "secondary" plans to stabilize the Canadian financial system. But within hours, his chief spokesman said the government wasn't planning any extraordinary measures.

At a morning news conference in Ottawa, the prime minister said the government is watching "very carefully" to see if the U.S. financial crisis will have any "rebound effects" on the Canadian economy.

"We're putting some secondary plans in place if that becomes necessary," the prime minister told reporters.

Asked what those plans might be, he said later in French that the government is considering proposals to help the banking system.

Harper's chief spokesman, Kory Teneycke, later clarified that the Conservatives aren't planning any major intervention in the banking system, or an emergency fiscal stimulus package to boost the economy.