Obama prods Europe to resolve crisis soon, points to drag on U.S.
President Barack Obama on Friday pressed Europe’s leaders to take “decisive” action to stimulate growth while dealing with debt, saying the eurozone crisis is putting a serious drag on the U.S. economy.
“The sooner they act, the more decisive and concrete their action, the sooner people and markets will regain some confidence,” Obama said at a White House news conference.
The president also cited Europe’s financial woes to pressure Congress for action on the portion of his package of jobs measures that have been stalled since he proposed them last September.
A U.S. slowdown would likely deal a blow to Obama’s bid for re-election and reinforce Republican Mitt Romney’s main line of attack against the president. A Labor Department report a week ago showed only 69,000 jobs were created by employers in May and the unemployment rate rose to 8.2 percent, up 0.1 percent-
“Even as European countries with large debt burdens carry out necessary fiscal
reforms, they’ve also got to promote economic growth and job creation.” — President Barack
Obama
age point.
With the state of the economy the dominant issue in the campaign, most national polls show Obama and Romney tied for support among Americans.
Republicans fired back quickly Friday regarding Obama’s comments on the U.S. economy, particularly his insistence that “the private sector is doing fine” when it comes to job creation.
Campaigning in Iowa, Republican rival Mitt Romney said Obama’s view was “defining what it means to be detached and out of touch.”
After Romney’s jab, Obama told reporters gathered in the Oval Office, where he held an afternoon meeting with Philippine President Benigno Aquino, “Listen, it is absolutely clear that the economy is not doing fine. That’s the reason I had the press conference.”
While there has been “some good momentum” in the private sector, “there are too many people out of work, the housing market is still weak, and too many homes underwater.”
“That’s precisely why I asked Congress to start taking some steps that can make a difference.”
Along with a specific recommendation that Europe inject much-needed money into its banking system, Obama said European leaders must focus on economic growth and job creation, not just “cutting and cutting and cutting” spending to deal with debt problems.
Obama repeated the prescription for the 17-nation eurozone that he outlined when he met with other leaders from the Group of Eight countries May 18 and 19.
“Even as European countries with large debt burdens carry out necessary fiscal reforms, they’ve also got to promote economic growth and job creation,” he said.
European leaders including German Chancellor Angela Merkel and French President Francois Hollande are “working to put in place a growth agenda” along with “responsible fiscal plans,” he said.
“They have America’s support,” Obama said. “Their success is good for us.”
Obama said the U.S. financial system can absorb “shocks” better because of changes put in place since he took office. Still, he said, if Europe goes into a recession, “that means we’re selling fewer goods, fewer services, and that is going to have some impact on the pace of our recovery.”
Spain could decide this month to ask for a bailout for its troubled banking sector, a step that would make it the fourth country in the eurozone to seek help since the European Union debt crisis started.
A bailout for Spain may dwarf previous rescues in the effort to stem the turmoil that began with Greece’s disclosure in 2009 that its finances were in worse shape than was previously known.
Spain’s Deputy Prime Minister Soraya Saenz de Santamaria said Friday that the government would not act until it has received a raft of reports on how much money Spain needs to save its banks from collapsing under the weight of soured real estate investments.
An International Monetary Fund report is expected Monday, with two independent auditor surveys due by June 21. She said no decision on a bailout had been made at Friday’s Cabinet meeting.
“Once the estimates of the numbers are known with regard to what the financial sector might need, the government will state its position,” she said.
Obama discussed the crisis in separate phone calls with Merkel and Italian Prime Minister Mario Monti on Wednesday. They agreed that it’s important “to strengthen the resilience of the euro zone and growth in Europe and globally,” the White House said in a statement.
Obama has joined European leaders who chafe at Merkel’s prescription of budget austerity. While Germany may back expanding EU job-creation projects, Merkel balks at proposals for greater deficit spending or underwriting the entire currency union’s debt, even as the turmoil risks driving Greece out of the euro and Spain to seek aid for its banks.
Obama insisted Friday he was not scolding European leaders or telling them what to do.
“The Merkel government is really getting sick of all the complaining and lecturing from the Obama administration,” said Fredrik Erixon, head of the European Centre for International Political Economy in Brussels.