Obama Looks to Move Past Debt as Italian Leader Visits

Italian Prime Minister Enrico Letta congratulated President Barack Obama on his “success” in getting opponents in Congress to raise the U.S. debt ceiling ahead of a default, saying that resolution of the standoff is important to stability in the global markets.

“It’s his success but it’s also our success,” Letta said to reporters at the end of a meeting today with Obama in the Oval Office of the White House.

Yesterday’s decision “was very important for the stability in the markets in the world, in Europe and in Italy,” Letta said. It was will be critical to controlling interest rates, he said, which is important to Italy’s plans for economic recovery “because we have such a big debt.”

Obama congratulated Letta for the steps he’s taken toward economic reform in Italy and his success in passing a budget.

“Italy is moving in the right direction,” Obama said.

The meeting between Obama and Letta comes as the U.S. president turns his attention back to foreign policy after the standoff with Republican lawmakers forced a partial federal government shutdown, threatened a U.S. default and forced Obama to cancel a planned trip to Asia earlier this month.

Obama, 52, and Letta, 47, said they also discussed a proposed trans-Atlantic trade agreement, security concerns in the Middle East and North Africa and cooperation among nations in the North Atlantic Treaty Organization. Obama said Letta invited him to Tuscany to “eat some very good food” and that he hopes to take him up on the offer soon.

Global Impact

The U.S. debt fight had become a cause for concern among European and Asian nations because of its potential impact on the global economy.

Today’s meeting also comes two days after Letta’s cabinet approved a deficit-cutting budget for next year with a labor-tax cut and 3.5 billion euros ($4.7 billion) in spending reductions to meet 2014 targets.

Letta, Italy’s third premier since 2011, is shifting the burden to government bureaucracy from taxpayers in a bid to spur the stagnant economy as deficit cutting continues.

Italy’s 1.6 trillion-euro economy, the third-biggest in the euro area, contracted eight straight quarters as tax increases curbed spending and investment.

Public-administration spending rose 0.6 percent in nominal terms last year to 801 billion euros as Letta’s predecessor, Mario Monti, counted mainly on tax increases to strengthen the budget and shield Italy from bond-market speculation.

Italy’s government said last month it plans to reduce the deficit to 2.5 percent of gross domestic product in 2014 from its target of 3 percent this year. Italy’s 2 trillion-euro debt is about 130 percent of GDP, the second-highest ratio behind Greece in Europe.

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