The biggest problem facing the global economy is not economic but political, according to Treasury Secretary Timothy Geithner.
In an op-ed to be published Friday by the Financial Times, Geithner argues that "political paralysis" is the biggest threat to continued economic recovery, and calls on policymakers both domestic and abroad to step up to the plate.
"The question is not whether we have the economic or financial capacity to strengthen growth, but whether we have the political ability to do the right things," he wrote.
In the piece, which will come the day of a meeting of G-7 finance ministers and central bank governors, Geithner encourages global leaders to not shirk from efforts to grow the economy because of political headwinds.
He notes there is a "general fear that political constraints will prevent governments and central banks from acting sensibly with the tools available."
But at the same time, he acknowledges that further stimulus, like the package President Obama pushed through in the first months of his term, are likely off the table.
"The challenges now are different and cannot realistically be confronted by a repeat of that coordinated global response of financial stabilisation and fiscal and monetary stimulus," Geithner wrote.
Instead, he said, governments with high deficits and interest rates should work to cut both, while nations on more solid footing should look for ways to boost growth. He echoes Federal Reserve Chairman Ben Bernanke in warning against major fiscal cuts immediately, pushing instead for fiscal reforms over the medium term so they do not endanger the tenuous economic recovery.
Geithner also touts the president's jobs speech, saying he will unveil a "very substantial package of public investments, tax incentives, and targeted jobs measures ... combined with a carefully balanced mix of fiscal reforms."
And he calls on European governments to work with the European Central Bank to tackle the growing debt crisis head on and with a united front. In particular, the bank needs to make an "unequivocal commitment" to support Europe's financial system and ensure governments can affordably borrow as needed.
Source: http://thehill.com
In an op-ed to be published Friday by the Financial Times, Geithner argues that "political paralysis" is the biggest threat to continued economic recovery, and calls on policymakers both domestic and abroad to step up to the plate.
"The question is not whether we have the economic or financial capacity to strengthen growth, but whether we have the political ability to do the right things," he wrote.
In the piece, which will come the day of a meeting of G-7 finance ministers and central bank governors, Geithner encourages global leaders to not shirk from efforts to grow the economy because of political headwinds.
He notes there is a "general fear that political constraints will prevent governments and central banks from acting sensibly with the tools available."
But at the same time, he acknowledges that further stimulus, like the package President Obama pushed through in the first months of his term, are likely off the table.
"The challenges now are different and cannot realistically be confronted by a repeat of that coordinated global response of financial stabilisation and fiscal and monetary stimulus," Geithner wrote.
Instead, he said, governments with high deficits and interest rates should work to cut both, while nations on more solid footing should look for ways to boost growth. He echoes Federal Reserve Chairman Ben Bernanke in warning against major fiscal cuts immediately, pushing instead for fiscal reforms over the medium term so they do not endanger the tenuous economic recovery.
Geithner also touts the president's jobs speech, saying he will unveil a "very substantial package of public investments, tax incentives, and targeted jobs measures ... combined with a carefully balanced mix of fiscal reforms."
And he calls on European governments to work with the European Central Bank to tackle the growing debt crisis head on and with a united front. In particular, the bank needs to make an "unequivocal commitment" to support Europe's financial system and ensure governments can affordably borrow as needed.
Source: http://thehill.com
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