Welcome to the Cliff: Round 2

I’d like to start by asking how 2013 is shaping up for you. The chances are that you would like to wait for a couple of days until events start to happen for you to be able to make a judgment. But over in the United States the public can start 2013 safe in the knowledge that the problem of the fiscal cliff remains only half solved.

Contrary to the predictions of the majority of political observers, myself included, a deal between the Republican-controlled House of Representatives and the popular Democratic administration was reached- not at the last minute, but rather a few hours beyond the official deadline to avert a preset package of tax rises and spending cuts. In order to do this, a deal had to be reached which imposes tax rises and spending cuts. I’m as surprised as you are that many have failed to notice this interesting incidence of doublethink that almost the entire world seems to have adopted in relation to this matter. Logic or no logic, that is nevertheless the unavoidable feature of the “solution”.

In any case, there is good news and bad news. The good news is that Obama has secured the continuation of welfare payments to the long-term unemployed (yes, these will be the question we will have to grapple with if the Conservatives’ attack on the welfare system continues); increases in Income Tax on Americans earning over $400,000 and an increase in their Inheritance Tax counterpart, which is charged on estates worth over $5,000,000. Considering the fact that the Republicans could completely gum up the works, its amazing that the Democrats have secured their agreement to this step towards a fairer distribution of the pain of deficit elimination.

There is, however, a significant catch. The deal gives Congress two months in which to agree $1,200,000,000,000 (£850 billion) of spending cuts to be made over the next decade. This is over 30% of the total federal budget. As if this isn’t enough of a problem, an agreement must also be reached on raising the “debt ceiling” once more, which currently stands at $16,400,000,000,000- a level that will shortly be reached. The US has 60 days to plan the slow dismantling of its public services and set another arbitrary debt cap that will last for another year or so.

It must be made clear to the American people that if they continue to give control of their legislature to a party which wants the eliminate the deficit and continue to reduce taxation on the well-off then a Democratic executive will be forced to hurt the poor and middle class  much more than necessary.  In the meantime, the Democrats must find a way of conceding as little ground as possible. If the plan is to cut spending by 30% over 10 years, then a fair offer would be to reduce spending by 3% in 2013, which could be made by cutting Defense (sic) by 10% and seeking efficiency savings of just over 1% elsewhere. Relatively painless, but it would be tricky when the Republicans are seeking cuts to Medicaid.

Do Paul Ryan and company fail to grasp that they will be held to account for the problems that they cause, and that the American public will no appreciate a Republican-inflicted  health care disaster? Or do they fancy electoral oblivion?

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