UPDATE 1-White House’s Summers says world must spur growth

* Growth does not mean simply printing money, Summers says

* Rift shaping up at G20 over fiscal policies

* Summers: Market confidence crucial to growth strategy

(Recasts, adds details throughout)

By Caren Bohan and Glenn Somerville

WASHINGTON, June 24 (BestGrowthStock) – World leaders need to take
steps to foster a more durable recovery, White House economic
adviser Lawrence Summers said on Thursday, while emphasizing
that growth strategies did not simply mean deficit spending.

In an interviews with Reuters Insider ahead of a weekend
meeting of Group of 20 leaders, Summers said that building
confidence also was “crucial.”

A rift is shaping up ahead of the G20 summit in Toronto
over how best to restore health to the still-fragile global
economy. European policymakers are emphasizing budget austerity
while U.S. officials warn that big economies must not stop
stimulus spending.

In a hint of how leaders might paper over their
differences, Summers said he and other officials recognized the
need to pursue growth in a responsible way. He acknowledged the
risk of spooking markets if budget policies are seen to lack
credibility.

“Confidence is a crucial part of a strategy. That’s why one
has to look, not just at the steps that are being taken at an
instant, but also at the steps that are being taken over time
and…the expectations that are created,” Summers said.

“There obviously is an importance in having a growth
strategy, but I think it’s too simple to think of growth
strategies only as running budget deficits or printing money,”
he said.

Summers, director of President Barack Obama’s National
Economic Council, said “pursuing policies that are on a
manifestly unsustainable path is not a growth strategy” but
could instead be harmful.

The Obama administration worries that hitting the brakes
too abruptly on economic stimulus could risk a repeat of the
mistakes that prolonged the Great Depression in the 1930s.

But officials in Germany and other European countries are
haunted by the threat of spreading contagion from the sovereign
debt crisis in Greece and want to reassure markets of their
commitment to reining in deficits.

In an opinion piece in the Wall Street Journal on Tuesday,
Summers and U.S. Treasury Secretary Timothy Geithner said a
premature focus on reducing deficits could push the global
economy into a downturn.

“We must demonstrate a commitment to reducing long-term
deficits, but not at the price of short-term growth,” Geithner
and Summers wrote. “Without growth now, deficits will rise
further and undermine future growth.”

ELECTION ISSUE

The debate over whether to focus on stimulus or tackling
soaring budget deficits has also loomed as an important
political issue in the United States.

With an eye toward congressional elections in November,
Republicans have criticized Obama and his Democrats over the
huge deficit, which hit $1.4 trillion last year and is expected
to reach $1.6 trillion this year.

Republicans have attacked as fiscally reckless the $862
billion economic stimulus package that Obama pushed through
Congress in the first few weeks of his administration last
year.

White House officials say the package was crucial to
reversing a freefall in the economy and label the deficits a
legacy of the Bush administration.

But in a reflection of growing voter unease over the
deficits, some moderate Democrats have grown skittish about
supporting a new package of aid to states and an extension of
unemployment benefits that the Obama administration says is
needed to boost growth and help bring down the unemployment
rate.

Obama has named a special commission that is expected to
report back in December with recommendations for reducing
long-term deficits.

In the interview, Summers also said there was “an awareness
in Europe of the importance of growth and an awareness also of
the importance of adding credibility and confidence to
financial systems.”

Stock Analysis
( Reuters Insider video interview with Larry Summers:
http://link.reuters.com/dux43m )
(Additional reporting by Mark Felsenthal and Emma Ashburn;
Editing by Andrea Ricci)

UPDATE 1-White House’s Summers says world must spur growth