Obama heads to Canada, where more skeptical audience awaits

McClatchy NewspapersJune 23, 2010 

WASHINGTON — What a difference a year — and a few trillion dollars of debt — makes.

When Barack Obama first dashed as president onto the world stage at a London economic summit a little more than a year ago, he was greeted like a rock star. Leaders clambered to get a picture with him. Queen Elizabeth invited him to Buckingham Palace. All at a summit largely in sync with his plea to stimulate and regulate the world economy.

Now, when he arrives Friday in Canada for another round of summits, he'll find a more skeptical audience.

Obama heads to back-to-back meetings of leaders of the world's eight largest industrial democracies, the Group of 8, and then the 20 largest economies, G-20, urging them to keep spending to stimulate the economy and warning that cutting spending too soon risks sending the global economy back into recession.

However, he faces resistance at home and abroad.

At home, a debt-weary Congress fearful of a Tea Party backlash is balking at his request for more spending as lawmakers look toward November elections. At the G-8 and G-20 summits, he'll face leaders from Europe frightened by the spreading debt crisis that began in Greece and now moving to tighten their belts.

"There is more that divides the United States and Europe on the economic agenda than unites it," said Heather Conley, the director of the Europe Program at the Center for Strategic and International Studies, a center-right policy organization.

"There is certainly unity on the security agenda and the political agenda, but there is actually great disunity on the economic agenda."

In a pre-summit letter to world leaders, Obama urged his peers to keep stimulating their economies, and to postpone cutting back spending until later.

"Our highest priority in Toronto must be to safeguard and strengthen the recovery," he said. "We cannot let it falter or lose strength now . . . In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avert a slowdown."

Obama said that he, too, is committed to paring back stimulus spending, but warned against doing it too quickly — in the U.S. or anywhere.

"We must be flexible . . . and learn from the consequential mistakes of the past, when stimulus was too quickly withdrawn and resulted in renewed economic hardships and recession."

Yet Obama himself doesn't have the flexibility he might like, lacking the kind of backing from Congress that he had when he went to his first G-20 summit in London.

Then, Congress already had enacted his $862 billion plan to stimulate the economy. Now, it's balking at his requests for more money to help cash-starved states make payrolls for firefighters, police and teachers.

Europe is moving to rein in budgets regardless of his warnings.

"Greece's debt crisis and the resulting euro-zone turbulence have sharpened the call to rein in deficits, but precipitous moves could endanger global recovery," said Stewart Patrick, a senior fellow at the Council on Foreign Relations.

During a pre-summit phone call this week, German Chancellor Angela Merkel rejected Obama's plea and stood by her government's moves to rein in spending.

"I told him how important budgetary consolidation was," she said Tuesday, adding that her plan to cut spending by $98 billion during the next four years wouldn't slow the German economy.

The United Kingdom this week also announced a package of spending cuts and tax increases, and France signaled that it could cut spending late this year if tax revenues drop.

Moreover, Europeans pointedly suggest that Obama should fix his own budget, which is running up trillion dollar-plus deficits.

"We are more about conservation, and that is why the letters are coming from President Obama with a rather critical attitude," said Janusz Lewandowski, the Commissioner for Financial Programming and Budget of the European Commission, the executive arm of the European Union.

"I would say that that there are some problems with debt and deficit not only at the federal level, but also at the state level here in America."

"Fiscal discipline is a virtue, one which Americans would do well to embrace," added former Arizona Republican Rep. Jim Kolbe, a senior fellow at the German Marshall Fund, in a blog post.

Kolbe cautioned against any one country or region acting by itself, however.

"In a world whose economies and financial systems are deeply intertwined, policies of fiscal austerity, stimulus, financial regulation, and monetary policy must all be coordinated."

(Maggie Bridgeman contributed to this article.)

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McClatchy Newspapers 2010

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