Just days before he is scheduled to meet in Britain with finance ministers from 20 of the world's leading economies, Treasury Secretary Tim Geithner today called on major countries to work together in sustaining stimulus efforts as long as necessary to pull out of the "deepening" global recession.
"You're seeing again quite substantial broad-based stimulus programs, but the important thing is that they are sustained over the likely duration of the recession, that you don't see people move prematurely to pull back that stimulus, so that will be the message here and the message I bring abroad," Geithner told reporters at a briefing in Washington.
"The general imperative we all share is that we're going to move together to do what it takes -- I think that is the simplest way to state the imperative, the obligation and the commitment."
The Treasury chief leaves Thursday night to attend this weekend's meeting of G-20 finance ministers and central bank governors in England ahead of the full G-20 summit next month in London.
He cautioned that the current downturn could become even worse if other countries do not act in concert with the United States.
"Our fortunes are closely linked to the rest of the world and if we don't get the world moving with us, then we face some prospect of a deeper, longer-lasting recession," Geithner warned.
Not only will Geithner push for aggressive worldwide action to address the global recession, but also for widespread regulatory reform to prevent future problems. He said it was the country's "utter, critical obligation" to establish comprehensive reforms.
"We need a race to the top, a race to higher standards," he demanded.
These regulatory reforms, he said, could prove crucial in preventing future recessions. As with stimulus efforts, Geithner again emphasized that global cooperation is essential for success.
"As we move domestically and pursue legislation on financial reform in the United States, we want to move in parallel with the rest of the world because our markets are global and nothing we do domestically in the United States will be as effective if we don't pull the world to a stronger framework for preventing future financial crises."
"Our markets are global. Our institutions are global," he stated. "You can't achieve our central objectives and obligations to protecting the financial system of the United States without there being a cooperative framework for complimentary action internationally."
Geithner said he plans to "lay out a broader agenda for reforms" when he testifies on Capitol Hill "in two weeks...or just before."
"The critical part of reforms will be to make sure that the major institutions, those that pose potential risks to the stability of the system, are brought within a much stronger framework of oversight with much more effective and carefully-designed constraints on leverage," he said, giving a preview of the reforms to come.
In the more immediate future, Geithner proposed that the G-20 should "substantially" increase the resources of the International Monetary Fund to address the "unprecedented contraction in global trade" including a "dramatic expansion" up to $500 billion of the New Arrangements to Borrow program.
"What we're seeing happen, really around the world, is really without recent precedent," he noted.