Thursday, 3 January 2013

U.S:'' Fiscal Cliff's dead '': Obama's short lived victory and republicans' bitterness

The US has managed to avoid plunging off the fiscal cliff -- for now. But the compromise is not meant to last and Washington will once again be faced with tough budgetary negotiations in several weeks. Much of the blame lies with a Republican Party that refuses to budge.

Barack Obama's announcement that a deal to avert the "fiscal cliff" has been reached was hailed as a victory for the Democratic president, however, the bitter political wrangling in Washingon is likely to damage the country in the long term.

Sure, Obama managed to save unemployment benefits for the long-term unemployed and avoided cuts to social and health benefits for the time being with the fiscal cliff compromise. But the ultimate decision over the cuts is far from being made. A year of endless negotiations over the debt ceiling and the unresolved budget issues awaits. The still fiscally conservative and resolute Republicans remain pitted against the '' middle-class advocate president'', who remains hopeful of bipartisan cooperation. But even if Obama is now finally determined to fight their obsession with spending cuts, he'll still have to adjust to governing with less money soon.

This deal means that the country will no longer face the some $500 billion (€377 billion) in increased taxes and $109 billion in defense and domestic spending cuts that would have taken hold. It ensures that the existing tax cuts for most people remain in place, while the tax rate for incomes above $400,000 for individuals and $450,000 for couples will increase from a current 35 percent to 39.6 percent. Taxes will also increase for the wealthy on dividends, capital gains and inheritances.

Republicans gave in on the spending cuts, known as sequestration, by agreeing to a two-month delay in budget reductions that would be paid for in part with new tax revenue, a condition they had resisted. And the White House made a major concession on the estate tax, agreeing to terms that would permit estates worth as much as $15 million to escape taxation by the end of the decade.

Initially, hopes were high in Washington that the cliff might be averted by a grand bargain on the long-term deficit. But this week's deal does not do that. It extends somewhat more of the Bush tax cuts than Obama wanted to extend, offers no new spending cuts, and on the sequester, it simply punted. Implementation was delayed two months until the beginning of March, thus creating a brand-new ''cliff'' of cuts to domestic and military programs that would hurt the economy and allegedly harm military preparedness.

"Stop kicking the can down the road." It's the expression that seems to be most popular with politicians in the United States these days. But it's little more than lip service given that they all continue to procrastinate when it comes to solving the country's problems. Month in, month out.

The fundamental problem behind the stalemate is a divergence of the parties in a consensus-based system of government. Or, to be more precise, the drifting off course of one of the two parties involved: the Republicans. In the United States, the opposition also co-governs; despite not holding the White House, the weaker party often holds a majority in the Senate or in the House of Representatives, or even both.

It is difficult to run a country with the Republican Party in its current state. Negotiations over the fiscal cliff have made this abundantly clear. For fully a year and a half, US President Barack Obama has been wrestling with the Republicans over the debt and the deficit -- just to be able to bring forth this half-baked mini-deal. It was torturous, exhausting finger-wrestling. But some are already announcing their plans for revenge. "Round two is coming in a couple of months," South Carolina Republican Lindsey Graham said of the dispute over the US debt ceiling. Sounds like fun.

It will be a small political miracle if other means were used to resolve the next stage over the next two months, the deferred budget cuts and increase in the debt ceiling. Perhaps falling over the cliff could have helped matters there. But politicians knew to prevent that from happening.

It's not America itself that is ill, but rather a party. When one party in a two-party system begins to block everything, the outcome is predictable: the system falters and paralyzes itself. It's a checkmate in Washington, D.C. Congress in the legislative period that is now ending was not only the most unpopular in generations, with a mere 11 percent approval rating -- but also the most unproductive in US history.

The division within the party was extremely apparent during the negotiations over the fiscal cliff. On the one hand, there was John Boehner, who as Speaker of the House is the de facto Republican Party leader. He is also a man of compromise. But Boehner's caucus also includes dozens of Tea Party followers, who torpedoed his negotiations with Obama. In the end, Boehner retreated.

This political paralysis could stifle economic recovery. The national debt, which now exceeds the annual economic output of the country, also threatens national security. President Obama's first term was characterized by procrastination and retreat when it came to foreign and security policy -- from Iraq to Afghanistan to Libya and Syria. And without Washington's leadership, what is to become of the 'peace process' in the Middle East and the Arab Spring? Beyond the cliff the world faces more adversity than a world power taking a breather from geopolitics.

It is telling that the deal finally reached was agreed to by two old men: Vice President Joe Biden and Republican Senate Minority Leader Mitch McConnell. Both men are septuagenarians and hail from an era in which Democrats and Republicans still did a good job of cooperating and enjoyed doing so.

The growth of ideologically polarized politics may prove toxic to government effectiveness and perhaps even to Americas social stability. The disappearance of the moderate Republicans represents a catastrophic loss of species diversity.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist

Photo-Credit: Reuters:Joe Biden, U.S. Vice-President.