Tags: Lew | G-20 | Stimulate | Demand

Lew Urges G-20 to Stimulate Demand Amid Slow Global Growth

Wednesday, 17 Sep 2014 07:50 PM

U.S. Treasury Secretary Jacob J. Lew urged the largest economies to invest in infrastructure and take other steps to lift domestic demand so the world has multiple engines of growth.

“Stimulating demand in the short term is part of the solution,” Lew said at the University of California Los Angeles Wednesday before departing for Sept. 19-21 talks of Group of 20 finance ministers and central bankers in Cairns, Australia.

“It’s quite obvious that some of these issues really do require more attention and more discussion,” he said. “There is no question that there is a problem with growth and demand in many parts of the world.”

In the U.S., the expansion is “quite strong,” he said. The world’s largest economy is predicted to grow 2.1 percent this year compared with 0.8 percent in the euro area and 1.1 percent in Japan, according to forecasts compiled by Bloomberg.

Asked about a rising American currency, Lew said “a strong dollar has always been a good thing for the United States.” The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, today reached the highest level since July 2013.

Speaking about China, Lew said the country is heading in the right direction by letting its currency appreciate. Still, he expressed concern about it using an anti-monopoly law to work against U.S. companies and creating barriers to doing business.

“What we need to do with China is talk about how to remove barriers, not impose barriers,” he said. “They need the competition in their economy.”

Tax Inversions

While the U.S. economy is one of the most competitive in the world and one where companies want to expand, businesses are encouraged under the current system to move their addresses to other countries to cut their tax bills, a move called inversions.

The Treasury Department will “very, very soon” announce steps that will remove a lot of the economic benefits of the process, Lew said today. Still, administrative tools can’t replace legislation that is necessary in order to discourage the practice, he said.

“Any company considering an inversion is now on notice that there is action that’s going to be taken,” Lew said, calling inversions legal “but wrong.” “It is our goal to do it as quickly as we can.”

President Barack Obama has labeled the practice that’s leading companies such as Medtronic Inc. and Mylan Inc. as an “unpatriotic tax loophole.”

Election Issue

Lawmakers, who returned to Washington for several weeks before they will break to campaign for midterm congressional elections in November, haven’t shown much interest in moving bipartisan legislation to curtail inversions. Most Republicans say the issue should be addressed as part of a broader revamp of the U.S. tax code.

“Congress, if they don’t enact tax reform, needs to enact legislation that shuts the door on inversions,” Lew said. “The actions we take will remove a lot of the economic benefits of inversion, but it will not close the door and that will require legislation.”

Lew said he held a staff meeting on inversions yesterday and that he will continue to consult his experts while traveling.

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Economy
Treasury Secretary Jacob J. Lew urged the largest economies to invest in infrastructure and take other steps to lift domestic demand so the world has multiple engines of growth.
Lew, G-20, Stimulate, Demand
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2014-50-17
Wednesday, 17 Sep 2014 07:50 PM
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