American politicians have around a day to formulate an agreement on taxes and spending. On January 1 2013, if no agreement is forthcoming, many middle income Americans will face a tax hike. Adding to the country's woes spending cuts will put people out of work and limit services, which many pundits predict will put the USA back into recession.
It has been a hard year for the American people. The seemingly never ending struggle publicly played out to elect a Republican Presidential Candidate must have taken its toll. It will have been wearing for campaign managers, candidates and their families and the American people.
Once Mitt Romney was nominated to represent the GOP the battle for the White House began in earnest. Both President Obama's and Mitt Romney's campaign teams assaulted the electorate with advertising and constant appeals for votes. In the end President Obama was re-elected for a second term but then, you could say, the real work began.
Elections always leave a rift or a divide. Some on the losing side move on more easily than others. President Obama may have won the Presidency but Senate and Congress remain divided camps.
House Speaker John Boehner, Republican, and Senate Majority Leader Harry Reid, Democrat, have both laid the blame for not reaching agreement on the fiscal cliff at each other's door. Today President Obama again weighed in to try and put pressure to bear. According to The Telegraph
President Obama made a rare TV appearance this Sunday as the crisis continues:
“What congress needs to do, first and foremost, is to prevent taxes from going up for the vast majority of Americans,” he said on NBC’s Meet the Press.
Failure to strike a deal would “obviously have an adverse reaction on the markets”, he said. “I think business and investors are going to feel more negative about the economy. The president said that Republicans’ “overriding, unifying theme” was preventing tax rises on the wealthy, even at the expense of a compromise that would help the middle class.
“The fact that [a deal] is not happening is an indication of how far certain factions inside the Republican Party have gone that they can’t even accept what used to be centrist, mainstream positions on these issues,” he said. ”
The President is right. When politicians appear to procrastinate markets respond negatively. The adverse effect this has on economies leaves everyone taking a financial hit, of sorts.
Yesterday The Independent
reported that the President was optimistic about a fiscal cliff deal, but as we all know 24 hours is a long time in politics.
How Republican House Speaker Boehner responded to the President's words today is telling. Again the Telegraph reported, this time Boehner as saying:
“Americans elected President Obama to lead, not cast blame.”
Mr Reid having met with the President announced that no further deal
was forthcoming from Obama. It now looks likely that a vote will take place. NPR reported:
An aide to House Speaker John Boehner put out a statement that noted that the group agreed the next step should be the Senate's — a tacit acknowledgement that Boehner is no longer the lead negotiator with President Obama.
"It was very constructive," said Sen. Harry Reid, who leads the Senate's Democratic majority. "We hope that it will bear fruit, but that is what we've hoped a lot. I think that the next 24 hours will be very instructive as to what we're able to accomplish."
Republicans had been predicting that President Obama would be presenting them with a new proposal, but Reid told reporters that did not happen.
It may still officially be the Holidays, with New Year's Eve tomorrow but that did not stop Congress meeting today, Sunday. According to CNN
a deal must be reached and put into place sooner rather than later.
The fiscal cliff is a term which has been used before in the US. In this case it refers to historic tax cuts, from the G W Bush era, which are due to expire. America's deficit is also under consideration. About.com
carries this fiscal cliff information regarding the options available to government
They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit would fall significantly.
They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States' debt will continue to grow.
They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth
The only certainties at this moment in time are that:
1 - Some people will pay more taxes, just who is the point.
2 - Confidence in the US economy will be hit unless a sensible compromise is reached soon.
3 - Those in power will have to compromise.
As Republican House Speaker Boehner said "Americans elected President Obama to lead" Yes they did, but will politicians let him do so seems the important question right now?