Obama calls G-20 “rift” over global crisis a “phony debate”

Obama today said there is no conflict between the goals of increased spending and greater regulation, calling it a “phony debate.”

Bloomberg | Mar 14, 2009

Obama Denies G-20 Rift Over How Best to Handle Global Crisis

By Kim Chipman

March 14 (Bloomberg) — President Barack Obama dismissed suggestions that the U.S. and some European allies disagree on how best to combat the deepening global recession as leaders of the world’s biggest economies prepare for a summit next month.

“There’s no conflict or contradiction between the positions of the G-20 countries and how we’re going to be moving forward,” Obama said today in a news conference with Brazilian President Luiz Inacio Lula da Silva. “There’s going to be a difference in details. Those are being worked on right now. I expect to have a productive meeting.”

Finance ministers from the Group of 20, which comprises the biggest developed and emerging economies, ended a meeting today in London without making an explicit commitment to increased government spending to stimulate growth, as the U.S. had been urging. Instead, the group pledged a “sustained” effort to clean up the non-performing assets that are burdening the balance sheets of banks and freezing lending.

U.S. Treasury Secretary Timothy Geithner approached the G- 20 meeting by lobbying his opposite numbers to follow the U.S. in injecting fiscal stimulus equivalent to at least 2 percent of their economy’s gross domestic product this year. European officials argued they had already spent enough, had bigger social safety nets and didn’t want to blow out budgets. European leaders have also stressed the need for greater financial regulation.

London Summit

The finance ministers’ meeting was held in preparation for a G-20 summit scheduled to take place in London on April 2. The group comprises the world’s largest developed and emerging economies.

Obama today said there is no conflict between the goals of increased spending and greater regulation, calling it a “phony debate.”

“I can’t be clearer in saying that there are no sides,” Obama said.

The Democratic president, who pushed a $787 billion stimulus package through Congress last month as part of his broader plan to jumpstart the economy with tax cuts and new government spending, stressed his support for rewriting the rules overseeing the country’s financial system.

“We have to do financial regulation, and nobody is going to be a more vigorous promoter of the need for a reform,” he said, adding that he expects such efforts will occur within individual countries as opposed to joint efforts.

“There’s going to need to be coordination between the various countries,” he said.

Monitoring Board

Obama noted that some European nations have increased spending in an attempt to boost their economies. He said there should be an international oversight board “that is accounting for how much stimulus is taking place out there.” That way, “various foreign ministries can keep track of what’s happening with respect to global demand.”

Officials within the Obama administration have repeatedly said they aren’t solely focused on a larger stimulus and seek to impose curbs on markets to prevent future turmoil.

White House National Economic Council Director Lawrence Summers said in Washington earlier this week that the administration will announce details of its plan to overhaul banking rules in the next few weeks.

G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.

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