You're reading: Obama ‘encouraged’ on Europe; G-20 seeks answers

LOS CABOS, Mexico — Needing an economic boost, President Barack Obama is trying to land assurances that Europe is closing in on a financial crisis response that will calm the markets and keep the continent's woes from undermining the world. As he presses European leaders to drum up economic demand, they want promises the United States won't plunge off a fiscal cliff by year's end.

Obama, as leader of the
giant but struggling U.S. economy, remains central to the Group of 20
summit talks wrapping up Tuesday in this coastal resort region. But it
is the European members gathered here, led by Germany and its
chancellor, Angela Merkel, who carry both the power and responsibility
to stabilize a eurozone reeling from debt, banking and political
problems.

Obama sent some upbeat signals Monday amid a sense of
global relief that Greece, based on new elections, would not renege on
its bailout terms and ditch the euro currency. Obama left a meeting with
Merkel feeling “encouraged” about Europe’s direction, a spokesman said,
as an even more consequential European summit on the crisis approaches
in Brussels.

Europe’s ability to turn around its fortunes fast
will have direct bearing on whether Obama wins a second term. The bigger
the drag from abroad, the harder the job growth in the United States.

Obama
said all countries must “make sure that we’re contributing so that the
economy grows, the situation stabilizes, confidence returns to the
markets, and most importantly, we’re giving our people the chance if
they work hard to succeed and do well.” After lobbying for Greek voters
to stick with budget reforms and the euro, he called their election
results a “positive prospect.”

Obama was spending much of Tuesday
on the economic crisis after taking care of some unrelated diplomatic
business — his first meeting with Vladimir Putin since the former
Russian president returned to the job this year. The leaders met for two
hours Monday, in talks dominated by a bloody Syrian conflict that has
deeply divided Russia and the U.S.

Obama has set up private talks
with one other leader, Chinese President Hu Jintao, on Tuesday before
closing off his summitry with a news conference in the late afternoon.

Although
the foreign gatherings allow Obama to show off statesmanship, every day
spent away from the United States and a direct focus on jobs in America
quietly gives headaches to his campaign aides. While Obama was in
Mexico, his Republican competitor, Mitt Romney, was campaigning in the
American heartland, trying to pull Wisconsin from Obama’s column.

Central
to the G-20 debate is how nations can boost jobs and consumer demand
without sinking deeper into debt. Obama has implored governments to
spend and grow, not just cut.

A draft of the leaders’ final
statement shows they want assurances that the United States won’t take a
deep plunge and drag them down as well.

The statement says the
U.S. will “calibrate” its attempt to rein in debt and spending “by
avoiding a sharp fiscal contraction in 2013.”

That’s a reference
to a big threat to economic growth in the United States after the
November election: the expiration of George W. Bush-era tax cuts and a
scheduled round of automatic spending cuts that could send the nation
back into a recession.

While the White House and lawmakers agree
that they must act late this year or early next year to avoid such a
“fiscal cliff,” there is no path yet on how to avoid it.

Wall
Street showed no giddiness after pro-Europe parties prevailed in
Sunday’s Greek election. U.S. stocks were little changed and investors
seemed fed up with Europe’s crisis.

Obama’s political move has to
been constantly show confidence in Europe’s ability to solve its
problems, but prod its leaders to move and chide them for not doing more
sooner.

Now, White House aides talk more positively about the
direction of the debate, as they see it, toward the role of government
in spurring economic growth.

“I think if you look at the shift in
the focus, you’ll see a very strong focus on supporting demand …
recognizing that economic conditions have deteriorated,” said Lael
Brainard, the Treasury Department’s undersecretary for international
affairs.

“This is very important to the Europeans in particular,” she said. “And yes, we have heard it from German colleagues.”