Kool-Aid or Politics (or both)?

The BBC News report filed last night on the eve of the G20 summit began by recognizing the clear division in economic policy among leading member states:

As the G20 summit begins in Canada, US Treasury Secretary Timothy Geithner said Europe and Japan should boost domestic demand instead of cutting spending.

European leaders have said reducing government deficits is key to setting long-term growth on track.

But Brazil warned that steep budget cuts could harm emerging economies.

Speaking in Toronto, scene of the summit, Mr Geithner said the global economy was still emerging from its crisis and "the scars of this crisis are still with us".

He said: "This summit must be fundamentally about growth."

However, this story is likely to play out more as one of context than of policy.

Perhaps the most important part of that context is that the European policy of cutting spending in the interest of more stable, if not balanced, budgets resonates with prevailing Republican policy. Indeed, whatever jokes Republicans may have told about Europe (old or new) in the past, the European Union has provided them with a talking point with which they can disagree with Barack Obama for some other reason than just disagreeing with him as a matter of principle. What makes matters worse for Obama is that they may be right. When Geithner says that he wants the summit to "be fundamentally about growth," it is hard to tell whether he is speaking in the interests of the United States or of Goldman Sachs. Whatever economic reforms may eventually be imposed, the latter has any number of instruments to profit from growth. Can the same be said of the country as a whole?

None of this should be taken as an endorsement of Republican policy. Republicans have a strong hand in just about every predisposing (if not direct) cause of the current economic crisis; but, as they say, a stopped clock is right twice a day. Under the current conditions, not only in the United States but also around the world, economic growth still looks too much like toxic Kool-Aid to be taken at face value as curative. Too much attention to growth has quickly turned the promising new European Union into a battle-scarred argumentative family, which is probably why the new British Prime Minister David Cameron will not use the noun without preceding it with the modifiers "long-term" and "sustainable." This leaves Obama with a choice that will probably be even more serious than that of who is in charge of the occupation of Afghanistan. Does he listen to the arguments of his hand-picked Treasury Secretary, even if the warrants are grounded in the interests of Goldman Sachs; or does he listen to the experience-laden voice of the European Union and give the Republicans the chance to crow about getting one right (for a change)? Obama has tried to make the case that he does not want to oppose Republicans just because they are Republicans, but ignoring Europe can easily blow up that case right in his own face. This G20 summit may prove an even stronger test of how effective a President Barack Obama can be than all of the aggravations pouring out of both Afghanistan and the floor of the Gulf of Mexico.