Leaders Agree to Slash Budgets

Another G-20, another non-binding agreement: World leaders signaled at this weekend’s G-20 summit in Toronto that yawning budget deficits—and not the continuing effects of the financial crisis—are now the most significant threat to world economies. The group of the world’s wealthiest countries left the summit with a non-binding agreement to cut budget deficits in half by 2013, and stabilize the ratio of public debt to gross domestic product by 2016. The agreement is not exactly what President Obama was hoping for: He and Treasury Secretary Timothy Geithner entered the summit warning that relaxing government spending while economies are still faltering could trigger a double-dip recession. Obama alluded to the disagreement in a statement, saying, “We must recognize that our fiscal health tomorrow will rest in no small measure on our ability to create jobs today.”