Look Obama won. The fiscal cliff has been averted, taxes were upped a bit, some reductions in spending took place, the debt and deficits will keep rising and everything can continue as before. And like I say, Obama won, so the economy is all his. Whatever happens from now on belongs to the Democrats. Good luck to them.
The front page story in The Australian the day after was “Global markets rocket on US fiscal cliff deal”. Those in the know must all be really pleased with the outcome, imbued with something like Neville Chamberlain’s peace-in-our-time moment. Of course there was this:
“While investors were happy to celebrate the compromise, many also expressed disappointment over the reduced scope of the deal, which props open the door for further rancor in the coming months. Some investors already were turning their focus to looming congressional fights over the budget, pre-programmed spending cuts and the debt ceiling, which limits the US government’s ability to borrow.”
So it’s not all beer and skittles, at least not if you’re a Democrat. It never was for the Republicans.
There are the spending cuts which are almost unambiguously a plus but amongst which will be cuts to defence that will take the US expenditure to the same proportion of GDP as it was in 1916 or so I understand. There is, of course, a much larger GDP for defence to be a proportion of, but it doesn’t seem part of an orderly international future, but that’s just me. But at least most of the Bush tax cuts are legislated in and can’t be so easily removed and there are some reductions in expenditure.
Meanwhile all of the problems that existed before continue. With Obamacare suddenly to enter everyone’s calculations, the US is rapidly heading for a kind of third world elites-and-serfs kind of future. You are in the government, good; you work for the government, good; you are on a direct feed from government, good. These are the new elite. Everyone else will struggle. Upwards mobility through one’s own hard work and effort, that will be the toughest road of all, when in the past it was the American way and many many took that route. It is a roadway that has, for the time being, been turned into a single lane pathway. When it will return to how it was is hard for me to say.
But the one moment of these fiscal-cliff negotiations I most enjoyed was when House Majority Leader John Boehner told Senate Majority Leader Harry Reid to "go @#%! yourself".
For that alone, I would keep him as the House Majority Leader. There may also be something there for Tony Abbott to think about the next time Julia Gillard calls him a misogynist or whatever
Steve Kates’ most recent book is Free Market Economics: An Introduction for the General Reader