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Was the financial cliff deal worth the price?
Yes, the financial cliff was avoided, not in the last hour before midnight on December 31, but on overtime. Still, that was good. America, and the world, avoided the likely scenario of economic recession, a deep plunge of the markets, and higher unemployment.
But at what price?
President Obama and the Democrats can take joy in that this doomsday scenario was avoided and they can take joy in that the fact that they forced the Republicans in Congress to break their pledge and, for the first time since 1993, vote for higher taxes. But the deal did nothing to resolve the country’s major economic problems, the debt, budget deficit, unemployment. And the settlement contained no new stimulus money to invest in the woefully neglected infrastructure or to create new jobs.
To reach a deal, President Obama also had to give up on his campaign pledge to raise taxes for everyone earning more than 250,000 dollars per year. Instead, the limit was set at 450,000 dollars, meaning than less than one percent of American tax payers will see their taxes increase. All others will now be exempt from paying their fair share when more revenues are needed and when Americans are paying less in income tax than the populations of other developed countries.
“In all the other countries that come to mind, protecting such levels of income is the sole preserve of conservative parties. In the United States, it is a matter of bipartisan consensus,” wrote Stephan Richter in The Globalist.
Yes, America is different from Europe. Here, taxes are toxic in a way they don’t seem to be in Europe, maybe because Europeans feel that they get something for their taxes, like universal health care, good public transportation, and affordable education all the way through college?
But the fact that Washington failed to reach a broader deal--the balanced deal that Obama was seeking to come to grips with America’s debt and deficit problems--also makes it similar to Brussels, if you believe The Economist, which wrote that “Washington’s pattern of dysfunction is disturbingly similar to the euro zone’s.”
This “dysfunction” is likely to come to a head in only a couple of months, in connection with the deadlines for the debt ceiling and the automatic spending cuts. The Republicans seem intent on revenge after the cliff deal, so the upcoming negotiations will likely seem like child’s play in comparison to what we just went through.
Was the price worth it? I am not sure.
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A Swede's view from D.C.
Internationally renowned journalist Klas Bergman will on a continuous basis cover the 2012 U.S. election process from a Swedish American perspective. Born in Stockholm, Bergman spent most of his adult life outside Sweden, reporting from western and eastern Europe, the Middle East and the U.S., based in Washington, DC and working mainly for the Swedish daily Dagens Nyheter and the Christian Science Monitor.
His primary domicile has been America, ever since his early student days in California in the 1960s. He now lives in the Washington, DC area.
For more information on the columnist and communications specialist, see http://ksbergman.wordpress.com
Klas Bergman's second book, "Drömmarnas Land" is released in Sweden on Sept. 20. isbn 978 91 7331 515 9. 278 pages, hard cover, in Swedish.
Carlsson Bokförlag.
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