U.S., Europe Disagree On Stimulus Ideas
LINDA WERTHEIMER, host:
It's MORNING EDITION from NPR News. I'm Linda Wertheimer.
STEVE INSKEEP, host:
And I'm Steve Inskeep. Good morning. Finance ministers who meet this weekend outside London oversee the overwhelming majority of the world's wealth. Their job is to keep it all from slipping away. They will discuss the world economic crisis. This is the meeting of the so-called the Group of 20, the largest economies in the world. And, of course, the largest of all is the United States, whose Treasury Secretary Timothy Geithner leaves today. NPR's Tom Gjelten joins us now for a preview. Tom, good morning.
TOM GJELTEN: Good morning, Steve.
INSKEEP: Is this group going to be looking for American leadership or looking to blame America for causing this crisis?
GJELTEN: Well, there's still some resentment, I think, that this all happened because the United States didn't properly supervise it banks, that the US model of capitalism is too unregulated and so some governments - some European governments in particular - are saying that the most important thing to do right now is to institute new international regulation of the whole financial system. But the United States has a different point of view. The United States thinks that the most urgent thing to right now is simply to get the world economy out of crisis.
President Obama yesterday said that for all that has been done here in the United States to revive the economy, it could be all for a naught if other countries don't implement similar economic stimulus programs.
So Treasury Secretary Tim Geithner is going to press these governments to boost their stimulus spending up to 2 percent of their gross domestic product. Right now, only the United States and China are meeting that target, Steve.
INSKEEP: Well, how many other countries are eager to borrow a lot of money and spend it like that?
GJELTEN: The European governments in particular, it just seems like they don't want to be told what to spend their money on. They're feeling that, for example, that their unemployment compensation programs already put them up higher than is commonly recognized. So they're going to be resisting, I think, that message.
INSKEEP: Well, that's part of the answer there. But if the argument from the United States is that you have consumers that simply cannot buy enough, that people are overloaded with debt and it has to be the government's responsibility to get some money moving, why would they argue against that?
GJELTEN: Again, I think they feel that that argument avoids the issue of regulation, and they really want to push the issue of regulatory reform higher on the agenda. And they simply don't think that the United States should be dictating to them what their budget should be.
INSKEEP: Okay, given that, are these finance ministers likely to agree on anything?
GJELTEN: They'll agree, Steve, on general principles. They'll say in general we think it's a good thing to spend more, and they'll agree that protectionism is a bad thing. They'll agree that there should be some discussion of more regulation. But I think the biggest agreement, the biggest development to come out of this meeting may be a decision by all these countries to put more money into the International Monetary Fund so that the fund will be in a stronger position to loan money to the neediest countries in Eastern Europe, in Africa, Latin America and Asia.
Those countries are really in a desperate situation because they can't borrow money to support any kind of stimulus program. So we're likely to see the G-20 finance ministers agree this weekend to put in as much as $500 billion in additional lending resources to the International Monetary Fund.
INSKEEP: Tom, thanks very much.
GJELTEN: Thank you, Steve.
INSKEEP: NPR's Tom Gjelten covers the international economy.
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