Project Syndicate | Thu, Mar 11, 2021
On March 11, Jack Lew, former Secretary of the U.S. Treasury, joined Whitney Debevoise and Meg Lundsager, Co-Chairs of BWC’s Legislative Working Group, to discuss the international economic challenges facing the Biden Administration.
U.S. International Priorities: Secretary Lew noted that President Biden, Secretary Yellen, and the new U.S. international economic team are taking over at a uniquely challenging moment characterized by unprecedented uncertainty. First, they must overcome the health crisis, which, for the U.S., means getting the U.S. population vaccinated. However, as a transnational crisis the pandemic does not respect borders and “it can’t end there.” Lew argued that the U.S. should work with international health organizations to extend vaccination efforts beyond its borders. Second, continued loss of economic growth and debt sustainability challenges are widespread and affect not only emerging economies, but the global economy. The U.S. must ensure that the international response to the pandemic does not fall short of need, and that recovery reaches all parts of the world.
U.S. Engagement with the IFIs: Secretary Lew stressed that the current health and economic challenges need to be dealt with simultaneously, and that the U.S. needs to be “fully engaged” with international institutions on both fronts. Commenting on future U.S. engagement with the IFIs, Secretary Lew highlighted the importance of educating Congress on the value of IFIs and the economic and geopolitical benefits that can come from supporting them. He also emphasized that Congressional support for new financial commitments to the IFIs must be secured in “real time” to ensure that resources are delivered shortly after commitments are made. He warned that any delay in the delivery of committed U.S. resources could undermine U.S. leadership and credibility.
Addressing Climate Change: According to Secretary Lew, climate change and the Covid-19 crisis must be addressed simultaneously. He noted that a particular challenge in addressing the climate crisis is that it requires the engagement and recognition of both developed and developing economies. It is therefore critical that the distribution of responsibility and cost for mitigating climate change is viewed as fair by all countries. Secretary Lew stated that this poses a “big challenge,” and that a complex series of steps will have to be taken to equitably distribute responsibility and cost.
Other Issues: Secretary Lew does not view digital currencies as an immediate stability risk or an immediate challenge to sovereign currencies. In his view, a more important development is the potential evolution of a market basket of sovereign digital currencies. Commenting on the future of the U.S. dollar, Secretary Lew stated that there is currently no significant challenger to the dollar. Consequently, the U.S. has time before a change in the dollar’s status as the world’s reserve currency becomes an immediate concern. Still, Secretary Lew warned that the U.S. should be mindful in how it pursues economic statecraft and in how it uses the authority and power of the dollar through sanctions. Asked about the effectiveness of the G7 and G20, Secretary Lew underscored the institutions’ value in shaping common understandings and driving action during moments of global crisis. However, he warned against expecting “too much” from these bodies in the absence of crisis, noting that the G7 and G20 should not be thought of as legislative bodies tasked with driving concrete policy action.
The webinar concluded with remarks from Whitney Debevoise and Meg Lundsager, co-chairs of BWC's new Legislative Working Group, in which they shared more information on the group's objectives and planned activities. Find out more about BWC’s Legislative Working Group here.