Monday, June 28, 2010
G-20 leaders agree to halve their deficits
By GARY BAUMGARTEN
Paltalk News Network
Leaders of the G-20 - gathering in Toronto - pledged to decrease their government's deficits by 50 percent by 2013.
Even President Obama is pledging a decrease in the U.S. deficit by then. But there's a difference between his approach and that of many of the other nations.
Many - especially European countries - have already begun belt tightening measures in response to the recession. In the United States the response has been: spend baby spend! The theory being that the only way to stimulate the economy is for the government to create jobs.
Economists debated this plan from its inception. There are those who say it's only staving off the inevitable - and that the shock to the economy when the money runs out and the bottom falls out - will be far greater than if the U.S. had followed the European lead.
Of course, President Obama was able to line up economists who supported his spending approach. The proof, as they say, will be in the pudding. We really won't know who was right until it's over and we can give the stimulus package a retrospective look.
But I don't understand how you can spend like this and reduce the deficit at the same time.
Not to mention the costs of the wars in Iraq and Afghanistan (and maybe soon in Iran and North Korea as well).
Meanwhile, violence broke out between demonstrators and police during the G-20 in Toronto. Some 900 people were arrested.