Friday, April 13, 2007

World Economic Outlook report suggests US should worry

A Power Outage At the White House

By David Ignatius

Friday, April 13, 2007; Page A17


What else is there to worry about? "A key question in assessing the risks to the outlook is whether the global economy would be able to 'decouple' from the United States were the latter to slow down more sharply than projected." This is from the latest World Economic Outlook report, prepared by the International Monetary Fund before this weekend's gathering of global bankers and finance ministers.

Rather than deferring to U.S. economic leadership, in other words, the global financiers are worrying about how to get out of the way if our pyramid of debt-financed consumer spending should topple. The IMF projects U.S. economic growth this year to be just 2.2 percent, below the average for advanced economies and less than half the projected growth for the world as a whole.

A telling sign of America's inability to solve chronic problems is the IMF's discussion of our addiction to oil -- something President Bush talks plenty about but lacks the political will or congressional support to change. The IMF has gathered some shocking statistics: U.S. gasoline consumption as a share of gross domestic product is nearly five times that in the other major industrialized countries; gasoline accounts for 43 percent of U.S. oil consumption vs. 15 percent in other countries; fuel efficiency in America is 25 percent lower than in the European Union and 50 percent lower than in Japan. No wonder the world doubts our seriousness on energy issues.

With the White House in decline, interest groups are gaining more clout to influence policy. Treasury Secretary Henry Paulson is working mightily to keep the U.S.-China relationship on track. But the administration recognized political reality this week in filing complaints with the World Trade Organization about Chinese piracy of intellectual property, drawing an expression of "deep regret and strong dissatisfaction" from Beijing. The New York Times, citing a China expert, reported that "Chinese officials appeared to be worried that President Bush was losing his ability to block protectionist moves in Congress."

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