G-20 Weighs Stimulus Spending Vs. Deficits
SCOTT SIMON, host:
This is WEEKEND EDITION from NPR News. I'm Scott Simon.
The leaders of the world's biggest countries meet in Toronto today to talk about the global economy. It's the G20 summit, which brings together wealthy countries like the United States and Germany with fast-growing economies like China and India. Although the tone of the meeting is cordial, there are sharp differences about how to deal with some of the problems the world faces. NPR's Jim Zarroli is in Toronto, joins us from there.
Jim, thanks very much for being with us.
JIM ZARROLI: You're welcome.
SIMON: And help us understand some of the differences that countries have, specifically over how to get the right mix of government spending and deficit reductions.
ZARROLI: Well, I think it stems from the fact, first of all, that the countries are in different places economically so they face different challenges. In the United States we have emerged from a very bad economic downturn. But we still have a long way to go. We still have high unemployment, a housing market that's showing new signs of weakness. And the White House is looking for other countries to help stimulate demand.
In Europe, they're facing this crisis which has happened from too much government debt and they want to cut government spending. Whereas in Canada, the economy was never hurt as badly as it was in other places. They're mainly interested in getting rid of trade barriers in other countries. And then there's China. China wants to keep its export machine going without inviting retaliation from other countries.
And then we also have just differences based on interests in geography. North America is probably a bit more concerned about Haiti, the European countries a bit more concerned about Africa. So there's a lot of divergence of interests here.
SIMON: And that results in people having different favorite steps they'd like to take next?
ZARROLI: Yeah, I think if you talk to U.S. officials, they will say these differences are somewhat exaggerated, that everyone agrees basically, you know, on the same things. We need growth. We need debt reduction. But tellingly, I think the White House says the debt reduction should be in the medium and long term.
And that's the really the issue. Everybody says they want to do deficit reduction, a lot of countries very much in debt. But do you do it now when the economy is still fragile in a lot of places, or do you wait until later?
But I think all of the world(ph) - the U.S. and the other world leaders say, you know, there are differences but they're nuances of difference. Everyone is onboard, basically. so I think what they're likely to do is try to come up with some kind of statement tomorrow when this ends that glosses over these differences. You know, it will say both things are needed - both growth and debt reduction.
SIMON: Prime Minister Harper of Canada is trying to persuade other countries to support increased funding for maternal and child health care. What kind of initiatives is he talking about?
ZARROLI: Well, one of the things you get to do when you're the host country is to set the agenda. And that means that if the leader of that country has a project that he or she wants to push, it can do so to some extent. And Prime Minister Harper has proposed money for, as you say, maternal and child care in poor countries.
Now, it's only about five or six billion dollars, which isn't a lot of money, really. And Prime Minister Harper has had trouble even getting commitments of that much. And the Canadian papers today are filled with kind of little snarky stories about it.
Harper was asked about that yesterday and he said, well, you know, the problem with these summits in the past has always been that we promise too much and then we didn't deliver. So I wanted to ask for manageable amounts of money. And this is something we ought to be able to do. But I guess it speaks to the fact that we're in the era of diminished expectations.
SIMON: Jim, the House and Senate negotiators agreed on a financial reform bill this week. Congress takes the bill up next week and the president indicated that he'll sign it. We're in a global economy, as you note. This will undoubtedly affect foreign investment. Any talk there about this?
ZARROLI: The White House says it's gotten some pretty positive response to the legislation so far. And this is important because the United States really can't come up with too many rule changes unilaterally, just because the financial markets are so global. I mean if one country bans, you know, a certain type of derivatives trading, investors can often just go look for a place where it hasn't been banned.
So if the major countries aren't in a kind of general agreement about what to do, it can undermine the efforts of an individual country. And here again there are some differences. I mean Germany, for instance, wants attacks on certain kinds of bank transactions. Not everybody likes the idea. So they will again have to gloss over the differences. The good thing is, there is a general agreement that financial reform is needed.
SIMON: Jim, a lot of these economic summits have drawn colorful and sometimes aggressive protestors. Any demonstrators there in Toronto?
ZARROLI: There have been demonstrations. But the police have erected concrete barriers all over downtown. Security is very tight. It actually feels kind of dead downtown. Of course a lot of the action has been up north, two hours north of here in the town of Huntsville. But things are moving into Toronto itself today, so we could see the temperature go up a bit.
SIMON: Jim Zarroli in Toronto, thanks so much.
ZARROLI: You're welcome.