Obama at G20: US needs faster growth to curb deficit

* US needs growth to cut deficit -Obama

* Says will make tough choices, if political burden shared

By Alister Bull

SEOUL, Nov 11 (BestGrowthStock) – President Barack Obama, in a clear
message to other leaders at the G20, said on Thursday that the
best way to control the massive U.S. budget deficit was to help
the economy grow faster.

“The single most important thing we can do to reduce our debt
and our deficits is to grow,” Obama said in his first public
response to bold early recommendations from a White House debt
panel that was quickly attacked by U.S. lawmakers.

Obama has been forced to defend U.S. policies blamed for
pushing up the U.S. budget deficit, while other Group of 20
partners, such as Britain and Germany have embarked on harsh
spending cuts.

U.S. officials say this is exactly the wrong thing to do
while a global economic recovery is still fragile, and Obama has
stoutly defended a decision by the U.S. Federal Reserve to print
another $600 billion to spur U.S. growth.

The Fed provoked unusually blunt public German complaints
that the move would hurt the dollar, and was therefore a
disguised form of trade protectionism — a diagnosis Obama, and
U.S. Treasury Secretary Timothy Geithner, both flatly reject.

However, calls for U.S. fiscal austerity have resonated
strongly with voters back home, who slammed his Democrats in
congressional elections last week and handed control of the U.S.
House of Representative back to Republicans.

Opinion polls showed voters were anxious over a U.S. deficit
of $1.3 trillion this year, which is set to rise sharply in the
years ahead as more Americans reach retirement age and begin
drawing government benefits.

Highlighting a cherished Republican goal to extend Bush-era
tax cuts for wealthier Americans, Obama said modest increases in
economic activity could yield massive fiscal benefits.

“We increase our economic growth by 1 percentage point, and
over time that could have as much of an impact as completely
eliminating the Bush tax cuts,” he said.

Tax cuts for American families earning more than $250,000 a
year are due to expire at the end of December unless they are
extended by Congress.

BIPARTISAN SUPPORT

Obama-appointed fiscal panel co-chairmen Erskine Bowles and
Alan Simpson floated proposals on Wednesday that they said would
bring $4 trillion in deficit reduction through 2020.

Obama, who refused to comment on the report until the final
version was on his desk, said the debate had been distorted
during the midterm congressional election campaign and called for
a measured, careful debate on the issues.

“Before anybody starts shooting down proposals, I think we
need to listen, we need to gather up all the facts. I think we
have to be straight with the American people,” he said during a
press conference with South Korean President Lee Myung-bak on the
sidelines of the G20 summit.

The two commission heads called for cutting benefits and
raising the retirement age for Social Security pensions, as well
as setting limits on the popular Medicare program for the elderly
and disabled, cutting payments to drugmakers and giving more
power to a health cost-control board.

Fourteen of the 18-strong panel must endorse the final
report, due in December, before it can go to the U.S. Congress
for a vote.

Remarks from some panel members distancing themselves from
its preliminary proposal show it may not get as far as to lawmakers, let alone through Congress where opposition could be
fierce.

Obama assured he was prepared to take tough decision,
provided the political costs were evenly shared.

“I set up this commission precisely because I’m prepared to
make some tough decisions. I can’t make them alone. I’m going to
need Congress to work with me,” he said. “The only way to make
those tough choices historically has been if both parties are
willing to move forward together.

(Editing by Tomasz Janowski, G20 Newsroom)

Obama at G20: US needs faster growth to curb deficit