World leaders, shaken by the European debt crisis but wary of ending stimulus programs, pledged on Sunday to slash government deficits in the most industrialized nations in half by 2013, with flexibility to meet the goal.
President Obama came to Toronto hoping to convince his G-20 colleagues to put more emphasis on stimulus spending to keep the economic recovery alive, reports CBS News chief White House correspondent Chip Reid. For the most part, he did not succeed.
Rift Between Obama and Other G-20 Leaders
More than 500 Protesters Arrested at G-20
They generally sided with cutting spending and raising taxes, despite Mr. Obama's warnings that too much austerity too quickly could choke off the global recovery.
"Serious challenges remain," they cautioned in a closing statement. "While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," according to the document from the Group of 20 major industrial and developing nations.
Summit participants navigated a careful course between Obama, with his emphasis on growth, and fellow leaders such German Chancellor Angela Merkel who advocated spending cuts and even tax increases.
French President Nicolas Sarkozy said: "I believe that the viewpoints came together, including with President Obama."
Obama said that in the short run, it was important to maintain stimulus spending in countries that could afford it. "We can't all rush to the exits at the same time," Obama told a news conference.
But if financial markets are skittish and don't have confidence in a country's fiscal soundness, "then that is also going to undermine our recovery."
The statement said industrialized countries agreed by 2013 to cut by half the size of the government deficit as it relates to the overall economy. That means a country that has a deficit that is the equivalent of 10 percent of its economy today would have to reduce it to 5 percent of the value of the economy in 2013.
They also agreed, that by 2016, overall debt won't grow as quickly as their economies do.
Mr. Obama said he agreed with the goal of slashing deficits, but Republicans in Washington say they've seen no evidence the president will display the kind of leadership needed to make that happen, reports Reid.
The closing statement did incorporate cautions against pulling back government supports too quickly. "To sustain recovery, we need to follow through on delivering existing stimulus plans, while working to create the conditions for robust private demand," it said.
Canadian Prime Minister Stephen Harper, the summit host, told a wrap-up news conference that "fiscal consolidation is not an end in itself" and that there is "an ongoing role for stimulus in the short term." Summit participants have been using the term "fiscal consolidation" to refer to what is generally seen as spending cuts and tax increases.
"G-20 still has a lot to do to fully entrench the global recovery but these are important steps forward. They are steps that Canada has been seeking," Harper said.
The statement made only a passing reference to the need for "greater exchange rate flexibility" and made no specific mention of China's recent announcement that it would allow its exchange rate to rise against the dollar.
That was a victory for China, which which has repeatedly said it did not want to be lectured by others on exchange rates.
The document came at the end of three days of economic meetings.
Conditions on the streets of Canada's biggest city remained tense Sunday. Police raided a university campus and rounded up protesters in an effort to quell further violence after youths rampaged through the city the night before, smashing windows and torching police cruisers. Police said they .
Harper called those responsible for the violence "thugs" and suggested the destruction and fires on the streets of Toronto justified the high cost of security that Canada spent for the summit. Harper has been criticized for the security pricetag, some US$900 million.
World leaders took note of the devastating oil spill in the Gulf of Mexico. "We recognize the need to share best practices to protect the marine environment, prevent accidents related to offshore exploration and development, as well as transportation, and deal with their consequences," the statement said.
The April 20 explosion on the BP-leased Deepwater Horizon rig unleashed the worst offshore oil spill in U.S. history. BP PLC is based in London, and the disaster has contributed to strains between the U.S. and Britain.
The G-20 statement limits the deficit-reduction goal to the most industrialized nations. It offers governments flexibility on when to start balancing their books. It does not include country-by-country goals, and it urges those in the most precarious financial positions to accelerate their plans.
European countries, in particular, have been rattled by the near-default of Greece on its government debt.
The document doesn't endorse a bank tax advocated by Europe and the U.S. to set up a fund to pay for future bailouts. Canada, Australia and Japan, whose banks did not fail in the crisis, oppose the levy.
Instead, it says all countries should make sure taxpayers are not stuck with the bill when banks fail, and leaves it up to individual countries to decide how they want to do that. Examples include a bank tax, stiffer cash reserve requirements or other mechanisms.
The G-20 includes the world's major industrial countries - the United States, Japan, Germany, France, Britain, Canada, Italy and Russia - plus major developing nations such as China, India, Brazil and South Korea. That roster accounts for roughly 85 percent of the world's economic output.
It would be more difficult for some countries than others to meet the new deficit targets.
The United States ran a record deficit of $1.42 trillion last year, or 10 percent of its gross domestic product. Private economists expect the deficit will decline only slightly to $1.3 trillion this year, which would amount to 9 percent of GDP.
Obama's budget plan from February would cut the deficit in half by 2012, as a percentage of GDP. The U.S. stands a generally good chance of meeting the targets, assuming a strengthening economy between now and then.
Britain is in worse shape. Its deficit this year is over 10 percent of GDP in 2010.
"For European countries with high budget deficits, especially for the U.K. with the highest budget deficit in the G-20, we have got to make our contribution to that sustainable growth by showing the world that we can live within our means," said British Treasury chief George Osborne. In a BBC interview, Osborne said that means stiff cuts in government spending.
Britain last week put forward a tough emergency budget, raising taxes and cutting spending by levels not seen since World War II.
On the other end of the spectrum, Canada's federal budget deficit will be less than 3 percent of GDP this year. Ottawa's plan aims to balance the budget by 2014-15.
© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.