Monday 19 March 2018

Robert Schmuhl: That's one battle over but many more to come for indebted States

AS the curtain came down on Tuesday night on Washington's fiscal cliff melodrama, a prime question for the US and world economies remained unanswered. Will the next performance of 'Waiting for Governing' be as absurdist as this one or actually be a serious effort to deal with America's debt and deficit crisis?

Under the cover of darkness in each case – the Senate voted before New Year's Day dawn and the House of Representatives long after sunset – Congress raised the taxes for individuals earning over $400,000 (€300,000), or $450,000 (€340,000) for families, and approved measures without much financial pain for those below that income. A collective sigh of relief could be heard in most quarters from the Atlantic to the Pacific.

With the clock ticking, the best to be achieved was the hike in tax rates for the wealthy, an extension of unemployment insurance for another year, a modest change in estate taxes and a few other provisions. US President Barack Obama reached his campaign objective of imposing higher rates on those most prosperous, but the number of well-off people doesn't bring that much revenue to the Treasury, around $600bn over the next decade.

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