Even despite the seemingly insurmountable partisan divide, a new short-term deal averting the Fiscal Cliff had been reached, but is this just deferring the inevitable?
By: Ringo Bones
From a political standpoint, the signing of a new short-term deal – i.e. “The Fiscal Cliff Deal” – averting the supposedly inevitably looming Fiscal Cliff seems like the proverbial kicking of the can down the road. Even though the newly reached short-term deal on the Fiscal Cliff have created a rather bullish and euphoric market rally back in Wednesday, January 2, 2013, it has since inevitably petered out. And while the up to the last second partisan brinkmanship of the U.S. Republican Party controlled House of Representatives have some wonder whether “Dictator of the House Boehner” should really get his well-deserved defenestration off the Fiscal Cliff, at least America’s middle and lower income families won’t be facing an increased tax burden – for now. But the question now is, is the new Fiscal Cliff Deal nothing more than a deferment of another inevitable partisan showdown on Capitol Hill during the next two months?
Even though the U.S. government will reach the 16.4-trillion U.S. dollar Debt Ceiling in a few weeks time, by March 2013, there will be another partisan Congressional showdown over the raising of the Debt Ceiling and the negotiation on the U.S. Republican Party’s proposed unreasonably steep Spending Cuts on President Obama’s socio-economic safety net programs. Given that President Obama is unlikely to have a repeat of the very heated reaching across the partisan divide type of negotiations that the GOP controlled Congress played last-second brinkmanship in establishing the Fiscal Cliff Deal, a deadlock on the Debt Ceiling and Spending Cuts in a few months’ time could spook the global markets yet again.
As both the Debt Ceiling and Spending Cuts still need Congressional approval, the U.S. Republican Party had since become clueless on what initiated the “Clinton Era Economic Expansion” of the latter half of the 1990s in the first place. Given that the very generous Bush era tax cuts on America’s richest 1% have yet to trickle down, it seems like a suicidal act of fiscal insanity for the Republican controlled Congress to extend it further. Even though Republicans tend to look down on new immigrants, it was the venture capital investment of naturalized Balkan conflict era refugees / émigrés that funded the internet / dot com boom of the mid 1990s despite capital gains taxes being 30% higher during much of President Clinton’s term compared to that during the first term of President Obama.