Thursday, June 10, 2010

We lose?

In the wake of all the hoopla over Harper's big bank tax "win" on the world stage, surely a rejection of the Harper G20 deficit-reduction proposal will constitute a loss that will be portrayed as such, far and wide. Right?
Canadian officials have been pushing for the G20 to adopt interim deficit-cutting targets because that long-term target is too easy for governments to let slide. Canada has asked G20 countries to agree to halve their deficits by 2013, and reduce them to 2 or 3 per cent of their gross domestic product by 2020. It fits Mr. Harper’s domestic budget plans, but other leaders might balk at targets that could come due while they’re still in office.

One would think Europeans in the G20 would be the most receptive. They faced the Greek crisis, and many are talking about the need to cut deficits now, and for common euro-zone fiscal-policy rules.

But they have been the most resistant to Canada’s proposal for common interim deficit targets, according to officials from several G20 countries. In meetings of G20 sherpas, they say they’ll deal with deficit targets inside Europe. Other participants say it’s a response to Canada’s bank-tax opposition. “The Europeans quite easily say, ‘Just like you said on the [bank tax] issue, you can do that if you want, but we don’t need to,’ ” one official from a G20 country said.
The debate on when to start cuts appears to be over before the June summit begins; G20 countries are going their separate ways.
We lose! If you accept the ridiculous Harper politicization of these issues, that is.

Another item worth noting in the deficit reduction vein, the "Canadian model" for deficit reduction that's all the rage in the UK is also getting some attention today. Krugman and another economist both raising questions about its appropriateness for this moment. Consistent with the U.S. position, essentially.

And more for the G20 boondoggle file:
In the age of video conference calls and Blackberrys, perhaps it would be wise to look at less costly ways for government officials to hold their meetings. In the mean time, considering America's steadily rising debt-to-GDP ratio, it would be wise for the United States, who will play host for the 2012 G-8 summit, to look at the Canadian example as a case study in what not to do.