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Is America about to follow Greece?
04 December 2012, 8:12 AM | Source: Matt Hall, SBS
We were wrong.
No sooner than you can say January 2, 2013, along comes the “Fiscal Cliff”, a dramatically towering precipice from which the United States of America appears poised to jump.
With it, the end of civilisation. Or, perhaps worse, the US turns into Greece.
In brief, it is no secret that the US is in serious debt. With a political stalemate between the House of Representatives, the Senate, and the White House, no one can agree on just how to fix it even if the answers are boldy there.
Raise taxes, cut spending, axe this, tax that, it’s such a mess that when President Obama hired some smart guys from both political parties to sit around a table and work out a sensible solution even that got rejected.
To compel the parties to nut out some kind of deal, President Obama set a deadline for the end of this year to sort out the problem. Otherwise, a list of automatic laws come into play that raise taxes on everyone and cut budgets for many government funded services.
It was a great idea in theory. Do a deal or we raise and cut everything. In reality, this dysfunctional congress seems incapable of looking out the window and agreeing on even the weather.
In simple terms, Democrats (including the President) want to return tax rates on those earning over $250,000 to what they were before President George W. Bush cut them and not cut government services. This, they say, would pretty much fix the deficit.
Republicans, uh, don’t want to “raise” taxes on those making $250,000 and above but want to cut the deficit by cutting government spending.
Also influencing any deal is the reelection prospects for candidates in 2014 (especially Tea Party Republicans initially elected on their attitudes to taxation) as well as the idea President Obama won a mandate a few weeks ago with an election victory that rejected Republican attitudes to taxation and service cuts.
One of the interesting characters in this play is Paul Ryan. Remember him? Mitt Romney’s Vice-President pick? He’s the conservative poster boy Chairman of the House Budget Committee with an eye on the 2016 Presidential race (already). His position is central to any deal.
The issue has provoked its own sub-campaigns – like this one – and on the weekend, both sides made their pitches to the people on the Sunday political talk shows.
“Right now I would say we’re nowhere, period,” said House Speaker, Republican John Boehner, pessimistically.
“We’ve put a serious offer on the table by putting revenues out there to try to get this question resolved,”
. “But the White House has responded with virtually nothing.”
Treasury Secretary Tim Geithner countered with his own hard talk.
“There’s just no reason why 98 percent of Americans have to see their taxes go up because some members of Congress on the Republican side want to block tax rate increases for two percent of the wealthiest Americans,” he said.
Grab some popcorn, pull up a chair. This is going to run and run.
Until at least January 1.