Deficit hawks score points at G-20

NEW YORK ( -- 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. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
View rates in your area
Find personalized rates:
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET


Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.