US treasury chief blames Washington for slow growth

DYSFUNCTION in Washington is one of the biggest drags on the US economy, undermining confidence and crimping growth, Treasury Secretary Jack Lew said on Tuesday.

“One of the most significant speed bumps for growth is coming straight from Washington, where some political leaders continue to generate one manufactured crisis after the next,” Lew said in remarks prepared for delivery at the City Club of Cleveland.

Lew was in Cleveland to meet with local business leaders, tour a Vitamix factory, which made blending equipment for food, and pitch President Barack Obama’s economic policies.

He zeroed in on the local impact from US$ 85 billion in across the board federal government spending cuts, known as sequestration, that went into effect at the beginning of March because Congress could not agree on an alternative.

He said the cuts meant 2,500 fewer Ohio children were enrolled in early childhood education programmes known as Head Start, and less college aid for about 3,300 students in Ohio. The cuts also forced the cancellation of the Cleveland Air Show, as the aerospace and defense industries were forced to adjust.

“So it is high time we replace the sequester before it causes even more pain,” Lew said.

The spending reductions were designed in 2011 to be so onerous that they would force the White House and Republicans in Congress to find a less drastic way to trim US budget deficits.

They included cuts to defense spending, normally dear to Republicans, and cuts to Democrat- supported programmes like early childhood education.

But policymakers failed to reach an agreement and now must deal with the fallout, with cuts that total US$ 1.2 trillion over 10 years unless they were replaced. — Reuters