U.S. Can’t Continue As Engine That Drives the Global Economy, Obama and Geithner Say
Citing the country’s trade deficit, President Barack Obama and Treasury Secretary Timothy Geithner each asserted last week that the United States cannot continue to lead the world economy.
“We said in Pittsburgh [at] the G20 that it was important for us to rebalance, in part because the U.S. economy for a long period of time was the engine of world economic growth; we were sucking in imports from all across the world financed by huge amounts of consumer debt,” Obama said Thursday during a joint press conference with Russian President Dmitry Medvedev.
“Because of the financial crisis, but also because that debt was fundamentally unsustainable, the United States is not going to be able to serve in that same capacity to that same extent,” the president added.
“We are obviously still a huge part of the world economy. We are still going to be open. We are still going to be importing as well as exporting,” Obama continued. “But the economic realities are such that for us to see sustained global economic growth, all countries are going to have to be moving in some new directions.”
The comments prompted criticism from talk radio host Mark Levin, a constitutional attorney and president of the Landmark Legal Foundation.
“So it is now official government policy, that we are not going to be the world economic leader,” Levin said on his radio show Friday. “That is the official government policy.”
Geithner repeated that view on Friday during an interview with BBC.
“We are in a very good position now of being able to deliver relatively strong growth rates to which we are seeing in major economies,” Geithner told BBC. “But I think the world understands now that world growth in the future can’t depend on the United States as much as it did in the past. So, for the world to grow together, we have to see more growth in the other major economies. Not just in the emerging markets, which are very strong now, in the United States.”
Levin said this is a sign that the president wants to “rebalance the globe.”
“We selfish, piggish Americans, and all the rest of the people out there who we abuse in other countries, we’ve got to rebalance this ladies and gentlemen and he is going to rebalance this for us,” Levin said. “Do you know what that means in the mind of a Marxist? We become poorer so the others can become richer, and then we get equality.”
He later added, “You know what our enemies must be thinking? This is cool. We don’t even have to defeat them. We’ve got Obama. Obama’s on our side. He’ll defeat his own people for us. “
However, a conservative economist, J.D. Foster, senior fellow in economics and policy at the Heritage Foundation, did not find the comments alarming, but a matter of reducing trade deficits with other countries. He concurred that the U.S. can’t be the largest source of global demand.
For a rebalance to occur, countries with a trade surplus, such as China and Germany, must be willing to reduce that trade surplus as America reduces the trade deficit, Foster said.
“It has to do with the fact that, if the United States, as it should, reduces its trade deficits to much lower sustainable levels, other countries are going to have to reduce their trade surpluses,” Foster told CNSNews.com. “They can do so as a matter of policy, or we can let price mechanisms force it. But it doesn’t have to be the product of government policy.”
Foster said that Obama’s policies are not consistent with the goal of cutting the trade deficit.
“The more immediate issue is that Obama is saying that the United States needs to have this rebalancing, but his policies are inhibiting the rebalancing,” Foster said. “His policies of maintaining the large government deficits inhibit the rebalancing process. Other countries, Germany and England, have austerity packages that are moving them away from the United States.”