Obama economic team pushes G-20 to focus on growth over deficits

Deficit
reduction must take a backseat to policies driving economic growth,
according
to President Barack Obama’s economic team.

That’s
the message Treasury Secretary Tim Geithner and National Economic Council
Chairman Larry Summers want countries attending the G-20 summit to hear.

In
an op-ed published in The Wall Street Journal on Wednesday, the two call on the
G-20 to cut deficits, but not at the price of cutting off economic growth. “Without
growth now, deficits will rise further and undermine future growth,” Summers
and Geithner write.

The
call from the U.S. comes in advance of a global summit where the debate over
spending versus budget cutting is expected to take center stage. Obama last
week urged European leaders not to cut off spending, which appeared to provoke
a backlash across the Atlantic.

{mosads}German
Chancellor Angela Merkel on Monday announced a budget savings program, and said
countries must avoid generating “inflated growth” with deficit spending.

The
U.K. and Japan on Tuesday announced austerity packages, and Canadian Prime
Minister Stephen Harper, who is hosting the summit, on Tuesday called on G-20
members to cut their deficits in half.

In
Congress, lawmakers are also pursuing ways to cut the deficit, but the Obama
administration has repeatedly warned that too much of an emphasis on budget cutting
could choke off an economic recovery.

“We
must demonstrate a commitment to reducing long-term deficits, but not at the
price of short-term growth,” Summers and Geithner wrote in their op-ed. They
wrote that global growth would double U.S. exports over the next five years,
supporting millions of U.S. jobs.

Summers
and Geithner said the G-20 should also focus on establishing a global framework
for financial regulation, and to raise living standards for developing
countries around the world.