WASHINGTON (AFP) – Are Washington and Athens fighting the same fight against austerity?
President Barack Obama’s weighing in on Greece’s side as it fights to lighten its bailout terms reflects both his own economic policy beliefs but also fears that Europe could plunge back into crisis.
“You cannot keep on squeezing countries that are in the midst of depression,” Obama told CNN on Sunday, in comments that resonated through Greece, where a new anti-austerity government has just taken power and is challenging the rules of the country’s financial rescue.
“At some point, there has to be a growth strategy in order for them to pay off their debts,” Obama said.
Obama’s comments should not be surprising.
It is not the first time he has called for the groups holding some 315 billion euros ($361 billion) of Greek debt to allow the country to slow reforms and spend more.
Obama has fought austerity pressures at home for six years as he sought to bring the country back from the Great Recession of 2008-2009.
His administration borrowed hundreds of billions of dollars to support banks and auto companies and keep the economy growing. Republicans fought that all the way, attacking the White House for running up the country’s debts, while some progressive economists still say it was not enough.
Meanwhile, the president regularly reminded Europeans that severely cutting back spending was not the way to restore growth and create jobs.
“President Obama knows first-hand how damaging austerity can be to an economy that is suffering from inadequate demand. That’s why he pushed a big Keynesian-style stimulus in 2009,” said David Wessel of the Brookings Institution in Washington.
But the timing of Obama’s comments on Greece was surprising, since the new government was in the middle of a showdown over loan terms with the troika of official creditors, the International Monetary Fund, the European Central Bank and the European Commission.
In fact, he spoke out one day before releasing his own annual budget proposal, which challenged the Republican-controlled US Congress to loosen the government’s purse strings and commit to more spending that would strengthen US growth.
“Talking about Greece is a way for him to make a case for his political choices,” said Jacob Kirkegaard of the Peterson Institute in Washington.