President Obama spoke with newly installed Italian Prime Minister Mario Monti Monday morning, congratulating him on his appointment and thanking him for taking on the job at such a critical time.
The European Commission is struggling to find a way to avert an ever-deepening financial crisis that has dramatically worsened over the past weeks, putting Italy under such intense pressure that former Prime Minister Silvio Berlusconi had to resign to make way for a government of economic experts led by Nr. Monti, a former EU commissioner.
“The president expressed his full confidence in Italy’s strength and vibrancy and underscored America’s support for the steps that Italy is taking to advance its economic reform program,” White House spokesman Jay Carney said in a statement.
Jose Manual Barroso, chief of the European Commission, said it wants to introduce eurobonds issued jointly by the 17 euro nations as one way to buttress the economy, but German Chancellor Angela Merkel is opposed to the proposal because it would expose taxpayers to the bad debt of countries with weaker economies.
As the U.S. struggles to downsize its own debt with the deficit supercommittee all but waving the white flag of surrender Sunday, the White House is calling on Europe to take swift decisive action.
“As for Europe, we remain in a position in which we are urging Europe to rapidly implement the plan they put forward … we believe that rapidity and decisiveness is needed here,” Mr. Carney said. “Obviously we have new governments in Italy, Greece and now Spain making it more critical for them to move forward.”
Mr. Carney also sought to reassure the markets about the supercommittee’s continued stalemate.
While the panel still has time to reach a compromise, if it fails, the $1.2 trillion in required deficit reduction over 10 years will take place because of the triggers in the law.
“The $1.2 trillion as a minimum will happen as proscribed by law,” he said. “Not in a way we would want, not in a way Congress would want … but the deficit reduction will happen regardless.”
With the clock ticking down on its Wednesday deadline, key congressional leaders began conceding failure Sunday, as both parties began pointing fingers over who is to blame.
The $1.2 trillion in automatic spending cuts over 10 years to the military and domestic programs will not start to occur until 2013, giving Congress more wiggle room to reach a deal after the next election.