NEW YORK (CNNMoney.com) -- Leaders of the world's most important economies agreed to ambitious targets for getting deficits under control, pledging to cut them in half by 2013, according to a statement made following the G-20 summit this weekend in Toronto.
The promise is just one of the commitments made at the Group of Twenty gathering of representatives from 19 countries and the European Union. The G-20 includes countries with mature economies, such as the United States and Germany, as well as fast growers China and India.
Throughout the weekend, discussions have focused on how to balance two competing goals: fostering the global economic recovery with government spending, while at the same time reining in ballooning debt levels (see 'The great spending debate').
The United States had been vocal about the need for governments to continue pressing for growth, while Europe -- fresh off its own debt crisis -- has been taking steps toward austerity.
In its statement Sunday, the G-20 appeared to try walk that middle ground.
"Strengthening the recovery is key. To sustain recovery, we need to follow through on delivering existing stimulus plans," the statement said.
But in declaring its deficit-reduction goals, the statement also noted: "Sound fiscal finances are essential to sustain recovery...and avoid leaving future generations with a legacy of deficits and debt."
The debate has highlighted differences between the Obama administration and European leaders.
Last week, German Chancellor Angela Merkel called budget cuts "urgently necessary," and European Central Bank President Jean-Claude Trichet said stronger public finances are part of a "policy which we would call confidence-building." Last week, the United Kingdom unveiled one of its harshest budgets in decades.
In comments following the summit, President Obama stressed the importance of promoting economic growth as a means to set up future fiscal soundness.
"We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs and growth today," Obama said.
Still, the deficit-reduction pledge is not a significant setback for the Obama administration, which already had a goal to slice the U.S. deficit, running at more than 10% of the size of the economy, as measured by gross domestic product.
The White House's 2011 budget proposal, unveiled in February, said the U.S. deficit would be 3.9% of GDP by 2014, achieved through spending discipline, as well as higher taxes on higher-income households.
The long-term goal is for the deficit to reach 3% of GDP, which many economists consider sustainable. But reaching the 3% target depends on the success of a bipartisan fiscal commission created by President Obama. The commission will make recommendations on Dec. 1.
China: Getting no mention in the G-20 statement was China's currency, the yuan.
China moved last week to begin letting it trade freely against the U.S. dollar. Since 2008, China has pegged its currency to the dollar, and many think it is artificially cheap, making it harder for U.S. companies to compete.
But the yuan has risen only slightly against the dollar in the past week, and many observers are skeptical China is committed to letting its currency rise.
Still, in statements this weekend, both Obama and Treasury Secretary Tim Geithner praised the action by China.
Financial Reform: The leaders also pledged to finalize regulations for financial firms by the next G-20 summit in November.
Among the key areas under review are bank capital requirements, increased transparency for hedge funds and other market players and more effective oversight.
The G-20 leaders also agreed to conduct "peer reviews" to ensure that reforms are implemented. In addition, they called for a plan to deal with "systemically important" financial firms that could threaten the global economy. The G-20 also agreed that the financial sector should make "a fair and substantial contribution" to pay for the cost of taxpayer funded bailouts. But they stopped short of taxing banks directly.
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