Some time ago I mentioned that after the US elections all you would be bombarded with from the media would be talk and comment on the fiscal cliff in the US. I will hesitate to talk about it myself from now on unless there are any significant developments as I can ensure you it will be beaten to death in the mainstream media.
In simple terms what the fiscal cliff is; is a mountain of debt that the US govt. has accumulated over the years through various measures and unbalanced budgets. The figure stands at approx 16 trillion which is large to say the least.
Until now there has been no real movement by either side of congress to tackle the situation in a bitterly divided house are still bickering over the measures needed to solve the cliff. Democrats want to increase taxes on the wealthy (incomes >$250k) and Republicans have been pushing for spending cuts.
Just to give you an idea of the scale of the problem here is a little graph that shows that the US defence department is the biggest employer in the world with an approximate figure of 3.2m employees.
That is just one department of civil servants on the US payroll and doesn’t take into account private business with government contracts I believe. So you can see why Obama would be loathe to cut spending at a time when unemployment is stubbornly high in the US even with signs of a pull back starting to emerge. Also you can see why Republicans have been wanting the cuts so as to try and get their man into office.
Ultimately they have to and will come to a middle ground whereby both spending cuts and tax increases are likely to happen to get us over the line, but these things usually get dragged down to the wire so expect some tense times over the coming months.
We are expecting the man himself to discuss the situation later on today which will mark his first public discussion on the topic since being re-elected on Tuesday. Will be interesting to see what he has to say and if he is combative in his style towards Republicans or attempts to broker some peace talks. Fingers crossed both sides see sense and just get on with it.
On a side note the media has been full of negative news coming not only from the US but also Europe, seems funny that it all comes rolling out after the election is decided, maybe Obama is not as solitary as people think and not afraid to ask for favours…..