Geithner told China yesterday that the Obama Administration was committed to bringing down the US deficit.
Barack Obama will quadruple the deficit this year.
Geithner also told China that Team Obama wants to bring down the deficit next year from 12.9% of GDP this year to 3% of GDP next year (a near impossibility)…
Or, in other words, back into Bush territory.
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In an interview with Bloomberg Television May 21, Geithner said the administration’s goal is to cut the budget shortfall to 3 percent of gross domestic product or smaller. That would be down from a projected 12.9 percent this year.
Seventeen of 23 Chinese economists polled in connection with Geithner’s visit said holdings of Treasuries are a “great risk” for the nation’s economy, according to a Chinese state media report yesterday. Still, the majority argued against quickly cutting them, the Beijing-based Global Times reported.
Geithner, 47, needs to show how the U.S. can prevent the value of China’s investment from being eroded by a weaker dollar or by the inflation that might be stoked by the stimulus money being pumped into the U.S. economy, according to Yu.
“It will be helpful if Geithner can show us some arithmetic,” he said.
…The Treasury released a transcript May 30 of a briefing Geithner gave last week at the Foreign Press Center in Washington. In it, he said he will stress with Chinese officials that he’s intent on maintaining the dollar’s strength.
“I will, of course, make it clear that we are committed to a strong dollar, that we are committed to bringing our fiscal deficits down over the medium term to a sustainable place, to a sustainable level,” Geithner said in the briefing May 27. “We believe in a strong dollar. A strong dollar is in the U.S. interest.”
This doesn’t sound good at all.
No wonder China is concerned.
The US has lost 16,000 jobs each day since Obama signed the Spendulus Bill and sunk the US economy further into debt.