Before G-20 Summit, Obama Touts Action
President Wants Nations to Take the Steps Congress Won’t to Spur the Global Economy
President Barack Obama will be jetting to Cannes, France, this week for the G-20 summit, trying to convince leading rich and developing nations to do what he can’t get Congress to do — take decisive action to spur the global economy now while embracing long-term fiscal reforms.
With the president’s jobs and deficit proposals stalled in Congress, the administration is pushing Europe to act aggressively to stabilize the debt crisis engulfing Greece. That crisis threatens to spread to other European countries and drag down the U.S. economy as Obama gears up for a re-election bid.
Sen. John Thune (S.D.), a member of the Republican leadership, said he thinks it’s a “hard sell” for Obama to tell the Europeans what to do.
“I’m not sure we have a lot of credibility when the president goes to Europe based upon the policies that he’s implemented here. They have just not been successful,” he said.
The message Obama is sending to allies is similar to the one he has sent to Congress for months without success.
In an op-ed in the Financial Times last week in advance of the summit, Obama continued to tout his jobs and deficit reduction plans even though they aren’t currently going anywhere. The administration is also pushing other countries to take action to stimulate their economies now while dealing with their long-term fiscal struggles, praising stimulus proposals in Japan, while urging China and other exporters to allow their currencies to gain value as a way to boost domestic consumption.
The G-20 push from the administration includes other items that aren’t going anywhere in Congress — such as phasing out fossil fuel subsidies and charging a new fee on the biggest banks. The administration is reviving its proposed “financial crisis responsibility fee” to pay for the costs of bank and auto bailouts — even though the idea was shot down by Congress last year and hasn’t gained traction this year either.
But with European leaders eyeing a new financial transaction tax as part of their own reform talks, the Obama administration is pointing to its proposed fee on the biggest banks as a better alternative.
“We put forward the fee because we think it’s more important to put the burden on the largest financial institutions rather than shifting it to retail investors,” said Lael Brainard, undersecretary of Treasury for international affairs, at a White House briefing on Monday. “We think that the financial responsibility fee, which is on the liabilities of the largest financial institutions, is well-targeted to make those institutions that are bearing greater risk pay more. It is better targeted to prevent evasion.”
The Obama administration has repeatedly sought to get the biggest financial firms to pay for the cost of the Wall Street and auto bailouts, but it hasn’t been able to get Congress to go along. The latest version, which was included in Obama’s September deficit reduction plan as well as his proposed budget, would raise $30 billion over the next decade.
Several Republicans, including Sen. Scott Brown (Mass.), made the elimination of a similar bank tax a condition of their support for the Dodd-Frank financial reform bill. Those issues are expected to become major focus points in Brown’s potential Senate matchup with reform champion and consumer advocate Elizabeth Warren. Warren is seeking the Democratic nomination to run against Brown next year. Bringing up the idea again could put pressure on the GOP heading into an election year, one Democratic aide said.
Several Republicans said they oppose Obama’s financial responsibility fee, including Thune, Senate Finance ranking member Orrin Hatch (Utah) and Senate Banking ranking member Richard Shelby (Ala.).
“I’m not advocating penalties or additional fees for banks right now,” said Shelby, who noted that he opposed the bailouts in the first place. The focus now needs to be on “how we can get this economy going,” he said.
Sen. Carl Levin (D-Mich.) said he doesn’t think any taxes have much of a chance — including ones on the biggest Wall Street banks. “They’ve drawn a line in the sand,” he said of the GOP.
Levin said it’s not a reflection on Obama that he can’t get his agenda through Congress.
“He doesn’t have a parliament” like European countries, Levin noted. “That’s just a fact of life,” he said, but that doesn’t mean the policies he’s advocating don’t make sense.
But Sen. Jay Rockefeller (D-W.Va.) said Congress’s gridlock is hurting the standing of the United States. It “hurts us all over the world. It makes us a laughingstock.”
Michael Froman, deputy national security adviser for international economic affairs, contended at the Monday White House briefing that the nation’s allies still expect the United States to lead.
“The U.S. is the largest economy in the world. We are a very important market to China and others. … We’re the center of innovation. We have a great network of alliances around the world that no other country has. … In the G-20 and the other forums that we’re involved in, I’m struck by the degree to which other countries very much look to the U.S. for leadership, thought leadership and leadership on action, to ensure a way to resolve global problems.”
The administration still has clout through the International Monetary Fund, too, which is partially funded by the United States, although the White House has pushed the European Union to resolve its debt crisis largely within its own borders.
“It remains the case that the Europeans have the capacity to deal with this crisis, and they need to implement the very important decisions they made last week to provide a conclusive resolution to it,” White House Press Secretary Jay Carney said Tuesday, amid concerns that Greece could still blow up an agreement.