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 Speech Preview: Excerpts Of Secretary Jacob J. Lew’s Remarks At The World Affairs Council In Seattle On Building A Stronger Global Economy


As Prepared for Delivery

"An examination of economic performance since the crisis suggests that a sustained recovery with solid growth requires a comprehensive approach that marshals all levers of economic policy – monetary, fiscal, and structural.  In the short term, the world fundamentally needs more demand.  By using fiscal space where available to make critical investments in people and infrastructure, getting credit flowing to the real economy, and creating an environment that encourages businesses to hire and grow, policymakers can put their respective economies on the right track and contribute to shared global prosperity.  A comprehensive approach must include—but not be limited to—sustainable fiscal policies along with medium- and long-term structural reforms to promote ongoing economic growth. 

"These are not just abstract numbers.  They tell a story that has enormous consequences for working people, and people who want to work.  In the United States, over the past four and a half years, the private sector has created more than ten and a half million new jobs, the longest stretch of private sector job growth in our nation's history.  The unemployment rate has fallen from a peak of 10 percent in 2009 to 5.8 percent today.  And we have seen a steady drop in the long-term unemployment rate as more Americans returned to work.  In fact, we have created more jobs since the pre-crisis peak than Europe and Japan combined.

"To be clear, there is more work to do here to help propel economic growth, increase job creation, and expand opportunity for the American people.  While our recovery has strengthened, we need to keep working so the gains are more broadly shared.  The President has put forward a host of initiatives to make a difference for our economy today and far into the future.   For a stronger economic future, he would increase investments in education, job training, research, manufacturing, and infrastructure.  To make sure hard working men and women are not trapped living below the poverty line when they work full time, he would raise the minimum wage and extend an expanded version of the Earned Income Tax Credit.  And to address the long term demographic challenges that could limit our potential economic growth, he would reform our immigration system.  In addition, the President has called for reforms to shore up our retirement and health care security programs to make sure they meet their obligations to future generations.  And he has laid out a plan to modernize our broken business tax system and use the one-time savings from business tax reform to help make investments in our nation's infrastructure.  Even though we are doing much better, more remains to be done and we are already reaching out to the new Congress to explore areas where we can work together.

"In short, status quo policies in Europe have not achieved our common G-20 objective of strong, sustainable, and balanced growth.  The ECB has taken forceful steps to support the economy through accommodative monetary policy.  But as recent economic performance suggests, this alone has not proven sufficient to restore healthy growth.  Resolute action by national authorities and other European bodies is needed to reduce the risk that the region could fall into a deeper slump.  The world cannot afford a European lost decade.

"In Japan, the "three arrows" of Prime Minister Abe's economic program were designed to forcefully combat deflation and fuel sustained economic growth.  The first two arrows – monetary and fiscal stimulus – contributed to stronger growth in 2013, but growth has weakened this year as Japan stepped back from its efforts on the fiscal side.  The third arrow – structural reforms – has not been fully released.  Earlier this year, the Abe Administration put forward corporate governance reform and other structural measures.  Even so, the test will be whether the third arrow is sufficient to transform Japan's economy, and the jury is still out.

"Indeed, the world is counting on the U.S. economy to drive the global recovery.  But the global economy cannot prosper broadly relying on the United States to be the importer of first and last resort, nor can it rely on the United States to grow fast enough to make up for weak growth in major world economies.    The world is stronger if we all take steps to bolster domestic demand."



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