G-8 Leaders Agree on Need to Mix Growth, Cuts

G-8 Leaders Agree on Need to Mix Growth, Cuts

By Alexis Simendinger - May 19, 2012

CAMP DAVID, Md. -- Europe's debt crisis may be a ticking time bomb, and gasoline prices could squeeze U.S. economic growth before November, but President Obama did his utmost during a weekend G-8 summit to try to control the uncontrollable.

The heads of the Group of Eight leading industrial nations, bunking in cabins and dressed informally in a woodland atmosphere, pledged on Saturday to mix growth and belt-tightening policies in the countries of Europe, and jointly pledged to increase oil supplies, including via global reserves, if new Iran sanctions go into effect later this year and decrease petroleum supplies.

In closing remarks as the sun was setting, Obama said the Eurozone crisis "threatened" global progress, including in the United States, and he cited his economic policies in the last three years as the catalyst for recovery since 2009.

Enlivening a debate he is waging with congressional conservatives and Mitt Romney, the president said his stimulative approach to growth "gives us more room to take a balanced approach to reducing our deficit and debt."

He added that Europe has a "more complicated" situation than the U.S., but "has taken significant steps to manage the crisis."

Obama said the leaders' conversations with the United States as host bore that out.

"There is now an emerging consensus that more must be done to promote growth and job creation right now in the context of this fiscal and structural reform," he said to reporters and cameras positioned under the trees at this mountain retreat. "That consensus for reform was strengthened here at Camp David." 

Keeping a European recession at bay, and holding down oil prices with what amounts to a European cartel that can manipulate oil supplies through the International Energy Agency, would help the president politically.

The leaders did not identify an oil supply trigger. They agreed to "monitor markets and see if it's appropriate to go to the IEA," Michael Froman, White House deputy national security adviser for international economic affairs, explained to reporters at a press briefing.

Newly elected French President Franҫois Hollande told French journalists traveling with him this weekend that Obama “wants growth to be evoked as a way of restoring confidence among the public and the markets.”

He added: “This G-8 summit was useful and productive. It makes it possible to send a dual message: growth and confidence.”

From Camp David, the heads of state traveled to Chicago for a NATO summit Sunday and Monday -- a meeting largely focused on Afghanistan.

Sovereign debt problems in pockets of Europe could yet crash over the entire Eurozone, which could potentially derail anemic growth seen now in the United States. And a showdown with Iran this summer could squeeze oil supplies and raise petroleum prices just as Americans weigh whether the president deserves a second term. In both cases, Obama tried to buy a little insurance together with his peers.

The leaders of the United Kingdom, Canada, Japan, Germany, France, Italy and Russia joined with Obama Saturday to portray a united front. “We agree that all of our governments need to take actions to boost confidence and nurture recovery including reforms to raise productivity, growth and demand [and] we support sound and sustainable fiscal consolidation policies,” they said in a joint statement that officials said the leaders tweaked, redrafted and edited themselves.

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Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at Follow her on Twitter @ASimendinger.

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