Obama wins the battle, the war could still be lost

obama

This is the smile of a man who just about got it all his own way. Obama must be quite the poker player as he oft knows how to turn a weak hand into a strong one or maybe it simply reflects the weakness of his opponents but the Republicans never really came to the party on this deal.

This deal to me only reflects a win and a show of strength for Obama and the democrats it does very little for America or the middle class that Obama is so staunch in his defence of.

The fiscal cliff has been avoided. For now. The bush tax cuts of ’01 have expired for american families earning over $400k. This is a little move away from the $250k always mentioned by Obama over the last few weeks but a considerable distance from the ludicrous $1 million that was “proposed” by Boehner and the GOP. Seemed like the Republicans never really got a handle on this cliff deal and spent more time trying to stand in the way of progress than providing any solutions. Ultimately they did not really get anything they wanted, taxes will go up for the wealthy and there are no real spending cuts to accompany that for now. Not hugely surprising as about a week ago the Republicans were not even backing their own deal the infamous “plan B” put forward by Boehner and then not backed by his own party.

The house will vote again on whether to raise the debt ceiling which they will more than likely do now. Some back of a napkin calculations i have seen so far say this will reduce deficit by $600bln over ten years. This is a drop in the ocean compared the 16 trillion debt pile they are currently sitting on so I would say this deal is akin to putting a plaster on a broken leg.

The best way to look at it is that, it is at least something, so compared to this time a month ago it is some kind of plan to at least raise some much needed extra revenue for the US purse but after that I’m finding little to get excited about. It avoids ” going over the cliff” and the deal was always going to go down to the wire but I would be stretching the truth if I said this deal goes a long way to solving any of the financial issues facing the most powerful economy in the world.

http://www.economist.com/blogs/freeexchange/2013/01/fiscal-cliff-deal

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