Ruth Steinhardt
A steadily improving labor market, high GDP and falling unemployment rate have the U.S. economy in the ascendancy, according to Treasury Secretary Jack Lew.
“But the United States cannot and must not be seen as the only engine of growth in the world, nor as the importer of first and last resort for the global economy,” he told reporters Friday evening at the Jack Morton Auditorium on George Washington University's Foggy Bottom Campus.
Major world economies need to take a multilateral approach to economic problem solving, Mr. Lew said. Rather than relying on any single policy approach, Mr. Lew said countries should use what he called the “three levers”—monetary policy, fiscal policy and structural reform—at various times and in various degrees to maintain economic stability.
Such policies might include investing in sustainable infrastructure and strengthening the roles of multilateral development banks.
“All major economies need to deploy a full toolkit of economic policy measures…[to] increase demand, boost employment and raise standards of living,” Mr. Lew said.
Many parts of the developed economy are experiencing a populist backlash against globalization, epitomized in the United States by the rise of Donald Trump and Bernie Sanders and in Europe by increasing pressure for Britain to withdraw from the European Union.
The treasury secretary said he and his counterparts tried to address many of the issues leading to that backlash at this week’s meetings of the IMF and the World Bank that took place on the Foggy Bottom Campus.
“Having policies that provide a level playing field for workers in the United States to compete in markets around the world [is] profoundly important in terms of our economic security and in terms of our global geopolitical stability,” he said.
That includes taking a hard line on issues of tax evasion, Mr. Lew said. “We need to act to deal with tax shelters and the problem of an international tax system permitting havens that to most people seem unfair.”
The United States has been “a part of the conversation for a long time” in negotiations between Greece and its creditors, Mr. Lew said. But while it was in the interests of the global economy for all parties to find “a sensible middle ground,” he said, the talks are “not fundamentally a U.S. negotiation or a U.S. role.”
Mr. Lew said he and his counterparts had seen “concrete progress” on the economic commitments of G7 and G20 member countries and suggested that the fact of the meetings themselves might be reason for economic optimism.
“In a moment when there is anxiety around the world about what the geopolitical and economic risks on the horizon are, knowing that the financial leaders of the world can get together and discuss hard issues…is very important,” he said.