The emphasis on economic stimulus has already been met coolly by many European nations, raising questions whether a gathering of finance chiefs from the Group of 20 rich and developing economies near London this weekend will make much headway battling a deepening downturn.
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Warning that theis deepening, the Obama administration on Wednesday called on major U.S. allies to do their part and support strong stimulus programs to fight the downturn.
The administration said decisive action was needed by all countries to complement what is being done in the United States. Treasury Secretary Timothy Geithner outlined an ambitious agenda, including a tenfold increase in the size of an emergency fund the International Monetary Fund uses to help countries in trouble to as much as $500 billion.
“We can do a really good job here at home, with a whole host of policies, but if you continue to see deterioration in the world economy, that’s going to set us back,” said in the following a briefing by Geithner.
By JENNIFER LOVEN and MARTIN CRUTSINGER, Associated Press Writers
It’s essential for other major countries to commit to substantial and sustained efforts to bolster their economies in the face of a deepening recession, Geithner later told reporters.
The U.S. challenge highlighted a rift with European nations who are balking at U.S. calls for more stimulus spending, arguing they do not want to pile up huge levels of debt. Some European critics have charged that the U.S. demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis.
Obama said the U.S. has two goals for the G-20 summit in April: to make sure there is “concerted action around the globe to jump-start the economy” and to achieve consensus on regulatory reform to take place in each country.
However, many European nations have been critical of U.S. calls for increased stimulus spending. At a meeting this week of finance ministers of the 27-nation European Union, officials said they were doing enough already to support the world economy.
Geithner sought to play down any disagreement between the U.S. and Europe.
“I think you will find very broad support to address these objectives,” he said. Geithner will attend talks Friday and Saturday in London with finance officials from the Group of 20 nations.
Those meetings are designed to develop a common agenda for a summit April 2 in London to be attended by Obama and the other leaders of G-20 countries, a group that includes not only the world’s wealthiest nations but also major China, India and Brazil.such as
Geithner said the U.S. will seek approval to expand a $50 billion fund the IMF maintains to support countries in trouble to as much as $500 billion. The IMF needs much greater resources to be able to provide emergency loans to countries during the current crisis, he said.