President Obama’s Message for G-20 Hits the Right Points

By September 24, 2009Economy, Taxation, Trade

A good lead editorial in today’s Washington Post, acknowledging the temptation to dismiss the G-20 confab in Pittsburgh as another “multilateral gabfest,” but finding merit in President Obama’s message about “rebalancing” the global economy. From “Balancing Act — Mr. Obama’s wise message for the Group of 20“:

His interest in a “framework for sustainable and balanced growth” is rooted in reality: For many years, Germany, Japan and China have grown by producing more than they consume and by exporting their goods to the United States, which has chronically consumed more than it produces. Oil-exporting nations have had a similar unbalanced relationship with the United States. The result is exporters’ accumulation of dollar reserves and their investment in the United States — subject to occasional bubbles and busts, an especially damaging example of which we have just experienced. You could say that the recession, which has spurred a major increase in U.S. household savings, was nature’s way of smoothing out these imbalances — albeit at tremendous financial and human cost.

U.S. consumers will need years to recover from the impact — and may never again drive global growth as they have in the recent past. It is therefore in both this country’s interest and that of its trading partners to adjust their growth models. The United States must save a bit more and become less dependent on imports; Germany, Japan and China must consume a bit more and reduce their export dependence. As Mr. Obama told CNN on Sunday: “We can’t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them.”

Agreed. The test for the Administration is to match its wise message with wise action. We’ve yet to see much action to support U.S. exports, such as pushing Congress to enact the pending free trade agreemens with Colombia, Panama or South Korea. And some of the proposed tax policies — ending deferral, for example — would undermine U.S. global investment.

Then there’s this from Reuters, “U.S. issues $7 trillion debt, supply to stabilize“: “NEW YORK (Reuters) – The U.S. government will have issued $7 trillion in bonds by the time the current fiscal year ends next week, but it expects the debt deluge to stabilize by mid 2010, a Treasury official said on Wednesday.”

All this government borrowing, all the government spending, doesn’t it invite inflation? Americans aren’t going to save more if they anticipate rising inflation.

(Hat tip: Glenn Reynolds.)

Join the discussion 6 Comments

  • bandit says:

    What possible incentive is there for net export nations to stop producing and exporting. Obama needs to learn this isn’t the faculty room it’s the real world.

  • Micha Elyi says:

    A G-20 summit without the gaggle of Seattle-style anti-global protestors, eh?

  • rssg says:

    This anti-American, big eared idiot needs to be removed from office. He’s a disgrace. A soft Marxist and an Islamic sympathizer.

    Impeach the Messiah.

  • Brad says:

    Obama has not said anything, this speech included, that indicates he can discern the difference between earnest Harvard Faculty Lounge discussions and the real world.

  • JAY says:

    Every action that the Obama administration has taken makes it harder for the US to compete. Lower taxes, free trade, and the end to global warming bs and nationalized health care would turn this economy around immediately. The current administration won’t take any action to help this economy. We have no choice but to wait for a change in Washington.

  • Jeff Carlson says:

    What ??? There’s a chance that Obama’s “wise” words will not be followed by similar wise actions ? I mean if Obama was just conning us and saying what we wanted to hear I could understand that fear but the man follows thru like the sun rising and setting. (By the way he’s responsible for the sunrise but ITS BUSH’S FAULT that the sun sets).

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