White House urges more work on fiscal policy, as G20 plans crisis talks

After the first-ever down grade of the US credit rating, the White House on Saturday urged lawmakers to work together to strengthen the country’s fiscal position and spur growth, as the Group of 20 leading economic powers prepare to hold a conference call to discuss the crises in Europe and the United States.

“It is important that our elected leaders come together to strengthen our economy and put our nation on a stronger fiscal footing,” White House press Secretary Jay Carney said in a statement.

The White House said the deal to cut spending and raise the US debt ceiling, sealed with the nation near default after months of fractious negotiations between the Obama administration and Congress, was “an important step in the right direction.”

The deal mandated $1 trillion in deficit cuts over 10 years, and set up a special committee of Congress find over $1 trillion more.


“Yet the path to getting there took too long and was at times too divisive,” Mr. Carney said. “We must do better to make clear our nation’s will, capacity and commitment to work together to tackle our major fiscal and economic challenges.”

He also defended US President Barack Obama’s push for a “grand bargain” of spending cuts and tax hikes that Republicans and many of his fellow Democrats opposed, saying it would have yielded substantial deficit reduction but required compromise and cooperation from all sides.

Mr. Carney said President Obama would over the coming weeks strongly encourage a bipartisan committee tasked with finding budget cuts under the agreed debt deal “to put our common commitment to a stronger recovery and a sounder long-term fiscal path above our political and ideological differences.”

Meanwhile, deputy finance ministers from the Group of 20 leading economic powers will hold a conference call to discuss the crises in Europe and the United States, a Brazilian finance ministry official said on Saturday

The official told Reuters the call was scheduled for 2230 GMT.

“It will be an exchange of information and opinions,” the official said by e-mail without providing further details.

Investors are eager to see signs of a coordinated policy response among major economies, which might prevent the crises from spreading or getting worse.

French President Nicolas Sarkozy and British Prime Minister David Cameron will on Saturday discuss the debt crisis in a telephone call, the French presidency said.

Mr. Cameron, currently on holiday in Italy, and President Sarkozy would focus on the “financial situation” in the call later on Saturday evening, it added.

Barely two weeks after a special summit held to offer a definitive fix to Europe’s rumbling debt crisis, the market panic biting the single currency is whipping eurozone leaders back into action.

With markets now homing in on government debt rather than banks, further turbulence lies ahead following Friday’s historic US ratings downgrade by Standard & Poor’s.

Italy, which along with other major economic power Spain faces threats of being engulfed in euro turbulence, is raising the possiblity of G7 ministerial talks “in a few days” to address the burgeoning crisis – with Britain, Canada, France, Germany, Japan and the United States.