So much of our attention is on Europe that we forget others have problems to. So it was helpful of The Washington Times to give us a succinct update of the US’s problem in Congress staring over edge of ‘fiscal cliff’. Not that they don’t have many problems but that they have only one fundamental PROBLEM.
This problem is the size of the government deficit and debt. All other problems may actually lead back to this problem. We could … (insert the statement of any other problem here) if only we had more money! Unlike Europe, the problem is not front-page – yet. But coming this winter to a theater near you …
The nature of the crisis is that the can consisting of spending cuts and tax increases reaches the end of the road Dec. 31. Congress has two options, allow the deferred spending cuts and tax increases to go ahead or roll them over. According to the Post:
That decision was put in stark terms Tuesday by the Congressional Budget Office, which in a new analysis said the economy will plunge into a recession early next year if Congress lets taxes rise and spending be cut, as called for under the law.
But if Congress changes the law to keep taxes low and spending high, it could add more than half a trillion dollars to the deficit in 2013, marking a fifth straight year of trillion-dollar deficits and risking the patience of the country’s creditors.
Nothing is likely to be achieved until after the presidential election. That in turns leaves little time for thoughtful action. And with the recent history of intransigence and deadlock, it will be an interesting winter in the US – warmer than usual we predict.