Leaders at Summit Turn Attention to Deficit Cuts

From The New York Times:

Despite President Obama’s pitch at the summit meeting for developed nations here for continued stimulus measures to prevent another global economic downturn, the United States will go along with other leaders who are more concerned about rising debt and join in a commitment to cut their governments’ deficits in half by 2013, administration officials said on Saturday.

Even as Congress allowed Mr. Obama to pack the big victory on banking regulation as he left for the Group of 20 summit talks, the Senate separately dealt him a significant setback that no doubt resonated with the foreign leaders here pushing fiscal austerity: Democratic leaders shelved an economic stimulus package of aid for the long-term unemployed and financially squeezed states, along with assorted tax cuts.

The setback underscored the difficulty Mr. Obama has had in making the case for stimulus. At home as abroad, Mr. Obama is confronting the limits of the consensus that took hold after the economic crisis began in 2008, which favored bigger deficits to spur job creation. At stake, as the administration sees it, is continued global recovery or a relapse into another recession.

Yet even within Mr. Obama’s administration there are fault lines on how much additional stimulus is desirable.

Some news reports in recent days suggested that Peter R. Orszag, the budget director who recently announced that he would be leaving in late July, was resigning partly out of frustration that he had lost the argument for deeper and quicker reductions in projected deficits.