Deficit-Cutters Ignore El-Erian’s Growth ‘Denominator’

U.S. and European policy makers arguing about budget deficits and debt may be failing to combat the other plague on their economies: sluggish growth.

With the U.S. Treasury set to exhaust its authority to borrow tomorrow, President Barack Obama said late yesterday that congressional leaders had approved a deal to raise the debt ceiling and cut the deficit, which must be voted on by lawmakers. The austerity drive follows similar consolidation in Europe, where countries from Greece to the U.K. have reduced outlays and increased taxes to bring liabilities under control.