In Debt and Politics

Europe’s debt crisis and the question of “whether the political system in the United States is up to the challenges we face” are the two main threats to the world economy, according to Treasury Secretary Timothy Geithner. He was speaking at a National Journal event. Geithner also noted that world governments should focus on improving economic growth, and said the U.S. economy was growing at a rate “too show for us.” Tonight, he’ll sit down with the rest of the G20 finance ministers to talk about the European crisis. The IMF/World Bank meetings will take place in Washington over the weekend.

Secretary of State Hillary Clinton sat down yesterday with PA President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyahu, according to a U.S. official. The three didn’t all get together—Clinton had separate meetings with Abbas and Netanyahu as Washington scrambles to avert a Palestinian bid for statehood. President Obama also spoke with Abbas and Netanyahu yesterday.

Secretary of Defense Leon Panetta is getting some backup in his calls for careful Defense budget cutting. Jacob Lew, the director of the Office of Management and Budget, wrote a letter to the chairmen of the House Budget Committee, the House Armed Services Committee and the House Defense Appropriations Subcommittee saying that drastic cuts “could pose a significant risk to national security.” He was referencing the cuts that would be imposed if Congress’s supercommittee can’t come to some sort of agreement to reduce the deficit by another $1.5 trillion.

China is meanwhile unhappy about the U.S. decision to retrofit Taiwan’s fleet of F-16s. Beijing called it a “grave interference” into internal Chinese affairs. And U.S. officials said that it’s becoming increasingly clear that the ISI was in some way behind the attacks in Kabul last week on the U.S. embassy and NATO headquarters. The Senate Appropriations Committee also decided to make aid for Islamabad contingent upon the country’s efforts in fighting militants.