US Urges Balanced Economic Approach in Europe

U.S. Treasury Secretary Jacob Lew is telling Europe it needs to adopt new policies to boost economic growth, but his advice has been met coolly in Germany.


In Berlin Tuesday, Lew met with German Finance Minister Wolfgang Schaeuble, who has staunchly advocated austerity measures in the 17-nation euro currency bloc as a way to resolve the eurozone's debt crisis. Lew has also visited Brussels, Frankfurt and Paris.


At a news conference with Schaeuble, Lew outlined his strategy to boost the economic fortunes of the eurozone, where growth has stagnated and the unemployment rate has reached a record 12 percent.


"'The driver for economic growth will be consumer demand and policies that would help to encourage consumer demand in countries that have the capacity would be helpful," said Lew.


Schaeuble said no one in Europe sees a distinction between austerity policies to rein in deficit spending and measures to advance economic growth.  He said Europeans would not be giving advice to the United States, where the economy is advancing slowly but unemployment remains high.


''We trust in the American government to know what's best for the country," he said. "We in Europe have enough work to do explaining why the situation in Europe is how it is, so we don't need to give the United States advice.''


An analyst with the German Council on Foreign Relations, Josef Braml, said the United States needs to adopt the eurozone's austerity measures to solve its own deficit spending problem.


''It is interesting that the Americans demand things from us which they are not able to handle themselves anymore," said Braml. "In the U.S., the Congress and the president are blocking each other, which makes it impossible to launch new stimulating programs on the economy.  I think that Jack Lew needs to implement what he is asking Germany to stop -- massive cuts.  The key word is 'sequestration' and that means that the U.S. will see soon that positive growth will come to stagnation.''