When Jack Lew took over at Treasury a little less than two years ago, the rest of the world was still blaming the U.S. for triggering the worst global financial crisis in generations. Today, the U.S. is doing better than nearly any other advanced economy.
So the Treasury secretary feels comfortable in doing a little boasting (“We have created more jobs since the pre-crisis peak than Europe and Japan combined”) and in offering some be-more-like-us economic advice to Germany and Japan.
It’s a sign both of the Obama administration’s confidence that the U.S. economy, finally, is gaining some momentum and of its view that the biggest threats to prosperity here are from abroad. “The global economy cannot prosper broadly relying on the United States to be the importer of first and last resort, nor can it rely on the United States to grow fast enough to make up for weak growth in major world economies,” he said in remarks prepared for delivery on Wednesday in Seattle, where he stopped on the way to a Group of 20 meeting in Australia.
Mr. Lew was a bit more specific than he has been in the past in giving advice to Germany and Japan, the other big players in the developed world.
He told Germany (and, just to be polite, the Netherlands) their government should spend more or tax less or both – and, he said, “the scale of the fiscal effort needs to reflect the urgency of addressing today’s demand shortfall.”
And he stepped into the debate in Japan over whether to allow another increase in the consumption tax to take effect as scheduled. Unless it is “more than fully offset” by other fiscal measures, Mr. Lew said, the tax hike will hurt short-term growth. He offered the temporary U.S. payroll tax holiday as one way to do that.
The Treasury secretary didn’t have much advice for China this time, perhaps because President Obama is there now, but also because the Treasury – while acknowledging the ripple effects of a slowdown in China on the rest of the world – sees China’s leadership responding to the short-term economic risks it faces and sees little chance of imminent economic or financial crisis there.
Mr. Lew said little about U.S. economic policy in this speech, reiterating briefing the president’s proposals (many of which stand little chance in the new Republican-majority Senate and House) and pleading with Congress to pass stalled legislation to alter the IMF’s governance to reflect the rise of China and other emerging markets.
But since Election Day, administration officials have expressed hope that if the White House can get anything done with the new Congress — a big if — then winning Trade Promotion Authority to close a trade deal with Asia, the Trans-Pacific Partnership, is one of the more likely measures to pass.
For the rest of the G-20, Mr. Lew’s message is pretty clear: America is back!