News / USA

Contentious US Fiscal Debate Has Worldwide Implications

House Speaker John Boehner, who spoke with President Barack Obama Tuesday, arrives for a closed-door meeting with the Republican caucus on Capitol Hill in Washington, Dec. 12, 2012.
House Speaker John Boehner, who spoke with President Barack Obama Tuesday, arrives for a closed-door meeting with the Republican caucus on Capitol Hill in Washington, Dec. 12, 2012.
VOA News
U.S. President Barack Obama and his Republican opponents in Congress are engaged in a contentious dispute over government spending and tax priorities that could have implications for the world economy.

In Washington, officials are calling it a "fiscal cliff."

It is a financial precipice calling for $500 billion in mandated government spending cuts and tax increases for most American workers that are set to take effect on January 1 unless Obama can reach a compromise with the Republican lawmakers on a new financial plan to begin to rein in chronic overspending by the American government.

Independent analysts say that if the crisis is not averted, the spending cuts and tax hikes would be so sharp that the jolt would likely plunge the U.S. economy, the world's largest, into its second recession in three years.

With the U.S. economy playing such a key global role, cascading over the fiscal cliff could prove detrimental to the world economy, said Steven Smith, a political scientist with Washington University in St. Louis.

"A lot of those economies in Asia, in Europe that count on a market for their goods in the U.S. would find that the U.S. consumer would be buying a lot less and it would exacerbate already serious conditions in those locations," he said.

Obama, the newly re-elected Democrat, has been trading proposals with the Republican leader of the House of Representatives, Speaker John Boehner. But the two sides do not appear to be close to an agreement. They remain hundreds of billions of dollars apart in the size of spending cuts the Republicans want compared to the White House and the scope of increased taxes being sought by the president and generally opposed by Republicans.

Boehner said he is still hopeful of an agreement, but concedes a wide gap remains in reaching one.

"I remain the most optimistic person in this town, but we've got some serious differences," he said.

The current dispute is one of Washington's own making.

Obama and his Republican foes were unable to reach a comprehensive spending agreement last year, and essentially agreed to postpone the tough choices until after last month's presidential and congressional elections. Now they are faced with the end-of-the-year deadline.

Obama wants to fulfill a campaign promise to end a tax break for the country's wealthiest households, those making more than $250,000 a year, but Republicans have balked, while saying they would agree to end unspecified tax loopholes that mostly benefit well-off families. Republicans, in turn, wants sharp cuts in the country's popular government health care plans for older people and impoverished Americans and pensions for senior citizens, programs most staunchly supported by Democrats.

The philosophical divide between the two parties is contributing to the stalemate, said Smith.

"It’s this balance, and where to achieve that balance, that is making things so difficult," he said. "Republicans are emphasizing more immediate deficit reduction and the Democrats are emphasizing the need to be patient and allow the economy to more fully recover."

Despite the rancor of the moment, Smith said he sees Obama and his political foes eventually reaching a compromise.

“My guess is that no one’s going to be happy with it. They’re also likely to kind of muddle through by not coming up with a large, long-term plan," he said. "My guess is that they can do some things to get through this crisis that will take them through a few months or a year that will have to be addressed again at a later time."

Smith predicted the two sides will make modest changes in the social welfare programs, impose spending caps on various government programs and modestly increase taxes on the wealthy.

He said a more comprehensive package is unlikely. "It seems unlikely they will come to a grand compromise. There’s a lot of pressure on them to do that... But it would require pretty serious concessions on both sides that neither side at the moment seems willing to make.”

You May Like

Multimedia Obama, Modi Break Nuclear Deal Deadlock

Impasse over liability issues had been stalling bilateral civilian nuclear cooperation; deal reached at start of US president's three-day visit to India More

WHO's Late Efforts in Tackling Ebola Highlight Need for Reform

Health experts debate measures to reform agency’s response to global public health emergencies in special one-day session on deadly outbreak More

One Tumultuous Year in Power for CAR's President

As sectarian violence raged across Central African Republic, interim President Catherine Samba-Panza has Herculean task: to end civil war and put country back on right track More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Worldwide Photo Workshops Empower Youthi
X
Julie Taboh
January 23, 2015 11:08 PM
Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.
Video

Video US Marching Bands Grow Into a Show of Their Own

The 2014 Super Bowl halftime show was the most-watched in history - attracting an estimated 115 million viewers. That event featured pop star Bruno Mars. But the halftime show tradition started with marching bands, which still dominate the entertainment at U.S. high school and college American football games. But as Enming Liu reports in this story narrated by Adrianna Zhang, marching bands have grown into a show of their own.
Video

Video Secular, Religious Kurds Face Off in Southeast Turkey

Turkey’s predominantly Kurdish southeast has been rocked by violence between religious and secular Kurds. Dorian Jones reports on the reasons behind the stand-off from the region's main city of Diyarbakir, which suffered the bloodiest fighting.
Video

Video Kenya: Misuse of Antibiotics Leading to Resistance by Immune System

In Kenya, the rise of drug resistant bacteria could reverse the gains made by medical science over diseases that were once treatable. Kenyans could be at risk of fatalities as a result if the power in antibiotics is not preserved. Lenny Ruvaga has more on the story from Nairobi.
Video

Video Solar-Powered Plane Getting Ready to Circumnavigate Globe

Pilots of the solar plane that already set records flying without a drop of fuel are close to making their first attempt to fly the craft around the globe. They plan to do it in 25 flying days over a five month period. VOA’s George Putic reports.
Video

Video How Experts Decide Ethiopia Has the Best Coffee

Ethiopia’s coffee has been ranked as the best in the world by an international group of coffee connoisseurs. Not surprisingly, coffee is a top export for the country. But at home it is a source of pride. Marthe van der Wolf in Addis Ababa decided to find out what makes the bean and brew so special and how experts make their determinations.
Video

Video Yazidi Refugees at Center of Political Fight Between Turkey, Kurds

The treatment of thousands of Yazidis refugees who fled to Turkey to escape attacks by Islamic State militants has become the center of a dispute between the Turkish government and the country's pro-Kurdish movement. VOA's Dorian Jones reports.
Video

Video World’s Richest 1% Forecast to Own More Than Half of Global Wealth

The combined wealth of the world's richest 1 percent will overtake that of the remaining 99 percent at some point in 2016, according to the anti-poverty charity Oxfam. Campaigners are demanding that policymakers take action to address the widening gap between the ‘haves’ and the ‘have nots’, as Henry Ridgwell reports for VOA from London.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid