Obama’s Difficult Fiscal Summer

PALO ALTO – Barack Obama’s administration suffered a string of fiscal setbacks this summer. But has it learned anything in recent months?

First, at the G-20 Summit in Canada, President Obama was soundly rebuffed by Canadian Prime Minister Stephen Harper, Great Britain’s new prime minister, David Cameron, and German Chancellor Angela Merkel, among others, on his demand for additional fiscal stimulus (more government spending). They are instead pursuing fiscal consolidation, following the immense explosion of public deficits and debt in the 2008-09 recession, and have called for cutting deficits in half by 2013 and stabilizing the government debt-to-GDP ratio by 2016.