Administration Urges Europeans To Ease Austerity Measures

Treasury Secretary Jack Lew is on his first trip to Europe, pushing for leaders to let up on strict steps that were enacted during the financial crisis. His trip comes as President Obama prepares to send his budget plan to Congress. It's said to include cuts to Social Security and Medicare. David Greene talks to Lew, who's in Berlin to meet with Germany's finance minister.

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DAVID GREENE, HOST:

This is MORNING EDITION from NPR News. Good morning. I'm David Greene. President Obama is preparing to send budget plan to Capital Hill this week and Treasury Secretary Jack Lew will be key in selling that plan to Congress.

Right now, Secretary Lew is on another mission: to sell European leaders on the idea of easing austerity to boost economic growth. We reached Secretary Lew in Berlin. Mr. Secretary, welcome back to the program.

SECRETARY JACK LEW: Good to talk to you, David.

GREENE: Europe is our number one trading partner and we have been hearing for some time that the health of countries in Europe, it's so tied to our economic health. Does that remain the case today?

LEW: I think that the truth is our economies are very much interconnected. So the concerns we have about each other's economic outlooks is really of mutual interest. And, you know, I've been trying to make the argument in my meetings, frankly, as we will tomorrow when the president issues his budget, that we shouldn't choose between growth and job creation and getting our fiscal house in order.

GREENE: Are you encouraging European countries to back off some of the austerity that we've seen in place? And if so, have you heard anything from any of the European leaders - from Germany, from elsewhere - that you think they might be willing to do that?

LEW: You know, I have heard concern in each of the meetings that high unemployment rates are not acceptable in the long term in Europe and that they need to worry about that. I don't think the argument we're making is that they should back away from fiscal restraint. Clearly, they need to get their fiscal house in order. And in the medium and long term, the kind of deficit debt reduction their looking at is appropriate.

The real question is the timing and the intensity as they're recovering. You know, our recovery, with 2 to 2.5 percent growth, doesn't satisfy us in the United States. There are many countries in Europe that still have negative or flat growth, and that's something that is very hard, in terms of world economic conditions and in terms of their domestic challenge with what is a very high unemployment rate in many countries.

GREENE: Did this question of whether fiscal restrain is the right recipe during an economy recovering sounds very much like it frames the debate that we're seeing in the United States right now. And I wonder what lessons do you take from Europe as you consider our budget problems here?

LEW: You know, when I look at the choices that we have to make in the United States and the challenges that Europe faces, in some ways our problems are more of a political than an economic nature. If we could get parties to come together, as the president's budget tomorrow will show, we could reach agreement on a balanced approach that provides for short-term growth and job creation and long-term fiscal restraint. I think Europe has a more challenging set of economic problems and our situations are not identical.

GREENE: Mr. Secretary, you said that a key to this will be bringing both sides to the center. A lot of Democrats are already saying that this budget, from what they know already, is not acceptable. They're concerned about the entitlement programs, cuts to Medicare, changes that could reduce Social Security benefits in the future. How do you respond to that criticism from the president's party?

LEW: Well, I think that we've had a debate going on now for a long time where the president's been clear that it's going to take broad and shared sacrifice, that he would not find it acceptable to make only reductions in entitlement programs, that we need also to raise revenues so that we have a fair balance of what the deficit reduction will come from. It's a package. And it would be a mistake to think that you could take it apart and still have bipartisan support.

GREENE: And now that sounds like a different approach than the past. I mean, you've actually been on this program before talking about a budget proposal as the beginning of a conversation. It sounds like this is a much more detailed plan. In many ways the president is saying: take it or leave it, in some ways.

LEW: Well, the president has never said take it or leave it. That's just not his approach to a negotiation. But it's also not the beginning of this conversation. We've had two years of intense back and forth and negotiation. And I think that some of the early responses suggest that others may read it as a starting point, and I would just caution them that that's a mistake. That's not the way to go to find the sensible center to resolve these issues and to get on and solve the problems the American people expect us to solve.

GREENE: Mr. Secretary, thank you so much for your time and safe travels.

LEW: Thank you very much. Good talking with you.

GREENE: Jack Lew is the U.S. Secretary of Treasury and he spoke to us in between meetings in Berlin.

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