Monday, November 12, 2012

The Looming Fiscal Cliff: President Obama’s Greatest Challenge?

Can newly reelected US President Barack Obama make a timely executive action to solve the looming Fiscal Cliff that could plunge America into another economic recession?

By: Ringo Bones

With reelection results that revealed a now highly politically polarized America, newly reelected President Obama could have his power seeped away from him if he doesn’t do a timely executive action to avoid the looming Fiscal Cliff that could not only plunge America into another economic recession, but could also increase the unemployment rate back to over 9 percent. With a seemingly insurmountable partisan divide between the president’s own party and the Republican controlled Congress, will President Obama succeed in solving his greatest political challenge of his second term – namely the looming Fiscal Cliff?

With less than two months to reach across the partisan divide between Democrats and Republicans, the Fiscal Cliff might well be President Obama’s greatest challenge of his second term in office. The U.S. government budget’s 2013 Fiscal Cliff – also known as the U.S. Fiscal Cliff – refers to the effect of a series of enacted legislations, mostly during after the U.S. Republican Party took over Capitol Hill back in 2010, which if unchanged, will result in tax increases, spending cuts and a corresponding reduction in the budget deficit. These laws include tax increases due to the expiration of the Tax relief, Unemployment Insurance Reauthorization and the Job Creation Act of 2010 – not to mention the spending reductions / sequestrations under the Budget Control Act of 2011.

Just days after President Obama was reelected, Wall Street got spooked with a biggest sell-off that set back the DOW back to July 2012 levels. And leading credit rating agencies are threatening to reduce America’s Triple-A credit rating if both Democrats and Republicans can’t reach a consensus before the January 1, 2013 deadline in formulating a “streamlined” U.S. Government Budget with a lower deficit than before. Well, 600 billion US dollars worth of taxes and spending cuts are at steak and President Obama and the rest of the Democrats – especially in the US Senate – will only work across the partisan political divide if there are tax increases for the top 1 per cent of America who now controls over 90 percent of the wealth. That alone could serve President Obama’s greatest challenge for his second term in office.

1 comment:

April Rain said...

If Bush-era tax cuts were allowed to expire without legislating a more progressive tax law replacement, Americans would be facing a 300 billion US dollar tax burden by 2013.