On the streets of Manhattan last
week, the American public were more concerned about the delay in
restoring their public services after Hurricane Sandy than about the
entrails of politics following the presidential elections.
New York votes Democrat. It took for granted that Barack Obama would get a second term, and did not look much beyond that.
Now, though, all America is having to peer into an abyss – or, to use the metaphor of the moment, over a ‘fiscal cliff’.
It describes the moment on January 1 when, unless the Republican-controlled House of Representatives and the Democrat President come to an agreement, huge tax rises will be accompanied by some deep federal spending cuts that experts fear will tip the country into recession.
The plan is that $136 billion (£85.5 billion) in cuts – 0.8 per cent of GDP – will come in at the same time as $532 billion of tax increases, taking a total of $668 billion out of the deficit, or four per cent of GDP.
The cuts include defence and unemployment benefits; the tax rises reverse all the Bush-era tax cuts, and will hit the middle classes. They will also hit employers by increasing payroll taxes.
The programme will be anti-growth and anti-enterprise, but Republicans claim that it is the only option, given the Administration’s refusal to address the deficit, and the country’s colossal debt, in other ways. It is the main reason why the euphoria of the first Obama victory in 2008 has not been repeated and why the stock market slid south when it was realised four more years of Obama were being served up.
Corporate America especially is in despair. For them, there is no end in sight for over-regulation, debt and financial incontinence: and the Chinese, especially, are in their rear-view mirrors, coming up fast.
This is a deeply divided country: divided not between Democrats and Republicans, or even liberals and conservatives, but, it seems, between givers and takers.
New York votes Democrat. It took for granted that Barack Obama would get a second term, and did not look much beyond that.
Now, though, all America is having to peer into an abyss – or, to use the metaphor of the moment, over a ‘fiscal cliff’.
It describes the moment on January 1 when, unless the Republican-controlled House of Representatives and the Democrat President come to an agreement, huge tax rises will be accompanied by some deep federal spending cuts that experts fear will tip the country into recession.
The plan is that $136 billion (£85.5 billion) in cuts – 0.8 per cent of GDP – will come in at the same time as $532 billion of tax increases, taking a total of $668 billion out of the deficit, or four per cent of GDP.
The cuts include defence and unemployment benefits; the tax rises reverse all the Bush-era tax cuts, and will hit the middle classes. They will also hit employers by increasing payroll taxes.
The programme will be anti-growth and anti-enterprise, but Republicans claim that it is the only option, given the Administration’s refusal to address the deficit, and the country’s colossal debt, in other ways. It is the main reason why the euphoria of the first Obama victory in 2008 has not been repeated and why the stock market slid south when it was realised four more years of Obama were being served up.
Corporate America especially is in despair. For them, there is no end in sight for over-regulation, debt and financial incontinence: and the Chinese, especially, are in their rear-view mirrors, coming up fast.
This is a deeply divided country: divided not between Democrats and Republicans, or even liberals and conservatives, but, it seems, between givers and takers.
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