G7 Seeks Steps to Cut World Imbalances (Reuters)

(The G7 telling * what to do? That's not going to go over well.)

G7 Seeks Steps to Cut World Imbalances

Sat Apr 16, 2005 04:04 PM ET

By Gernot Heller

WASHINGTON (Reuters) - Finance chiefs from the Group of Seven economic powers on Saturday vowed "vigorous" action to reduce global economic imbalances, calling for U.S. budget deficit cuts and reforms in Europe and Japan. Although the G7 described record oil prices as a "headwind" facing the "robust" global economy, it appeared more concerned about increasingly lopsided international accounts.

China's absence for the first time in three meetings meant little progress was made in addressing Beijing's long-standing fixed currency peg to the dollar -- seen as a key magnifier of potentially destabilizing trade and financial imbalances. "Vigorous action is needed to address global imbalances and foster growth," said a statement issued after the meeting, referring to global payments gaps like the shortfall in U.S. trade and financial accounts close to 6 percent of national income.

The statement highlighted the need for a lower U.S. budget deficit, for further structural reforms in Europe and Japan and more budget "consolidation" from Tokyo too. Despite advance lobbying from the United States for the G7 to lean more directly on China over the yuan, the final statement merely repeated a 14-month-old call for more currency flexibility in regions that required it.

(more at link above)

Two ways to balance the budget, spend less, or tax more.

Since Republicans love to spend more and tax less, we know who's fiscally irresponsible.