US Treasury Secretary Mr John Snow said today that cutting a record budget deficit was a top priority for the second-term Bush administration and challenged Europe to play its part in helping trim the US trade gap by boosting its own economic growth.
"The current account deficit is a shared responsibility," Mr Snow said in prepared remarks for delivery to the Royal Institute of International Affairs, adding that Europe should introduce reforms to make itself a more attractive investment site through tax cuts and other measures, just as the United States needed to save more.
"Specifically, they need to grow more rapidly," Mr Snow said in reference to France and Germany, implying that would be more fruitful than complaining that a declining US dollar was making it harder for them to maintain strong export levels.
Mr Snow's remarks were aimed at countering mounting European criticism that the US was running up recklessly large budget and trade deficits that were putting the dollar's value on the skids and hurting Europe's prospects.
Mr Snow described himself as "a life-long deficit hawk" and insisted the budget deficit will cut in half over the next four years to less than 2 per cent of national output.
The shortfall between the government's spending and its income swelled to a record $412 billion, or 3.6 per cent of national output, in the 2004 fiscal year that ended September 30th.
The other US deficit that attracts European ire - the current account that includes merchandise and investment flows - was running at a record $660-billion pace in the second quarter or more than 5 per cent of national income.
Mr Snow emphasised that faster economic growth was vital for deficit reduction and said the United States had taken the steps it needed to, after the shocks caused by terror attacks in 2001, corporate scandals and the bursting of the high-tech boom to get its economy back onto a stronger growth track. "We have the growth and it is melting the deficit," he said.
The US Treasury chief has already visited Ireland, which he praised lavishly as an example of how tax cuts can stimulate growth.
"Ireland is proof-positive that pro-growth, free-market policies work," Mr Snow said.
The selection of Ireland was intended to contrast with sluggish continental European economic performance.
Mr Snow did not single out the European countries he considered to be laggards on growth though he has said in recent days that the United States would like to see Germany and France step up their performance.