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No tidings of joy from US politicians

Publication Date : 28-12-2012

 

When US President Barack Obama left Hawaii and landed in Washington yesterday, much of the east coast of the United States was being battered by thunderstorm, snow and even tornado. More than 1,000 flights were cancelled on Wednesday alone.

After spending five days relaxing with his family, such a greeting should have served as a reminder of the harsh reality the nation faces. The golf and relaxation must have seemed surreal once he was back in the White House, especially when looking east toward Capitol Hill, less than two miles away.

In many countries, the public would be outraged if their leaders went on vacation with a "fiscal cliff" only days away. But few in the US seem to mind their leaders taking some time off to be with their families at this time of year no matter how bad the situation is.

And the situation in the US is grim: If Obama and the Republicans don't reach an agreement by December 31, automatic budget cuts and tax increases, about US$600 billion in total, are set to begin in January, which will have a negative impact on US families, businesses and the economy as a whole.

Economists have predicted another recession for the US economy, which has just started to show signs of recovery. They have also forecast that food prices could double.

While most of the US news networks have focused on the impact the budget cuts and tax increases will have on US economy, few have paid much attention to the damage the "fiscal cliff" would inflict on other countries.

Vice-Premier Wang Qishan, who visited Washington a week ago, voiced deep concern about the negative impact of the "fiscal cliff" on the global economy, so have many others such as Christine Lagarde, the managing director of the International Monetary Fund, and Australian Treasurer Wayne Swan.

An analysis by the UN Economic and Social Commission for Asia and the Pacific shows that the downward pressure on the global economy and slack demand from the US caused by the "fiscal cliff" will have repercussions in Asia. The growth of some economies, such as Singapore, could decline by up to 2.2 per cent.

China's credit rating agency, Dagong, this week put the US sovereign rating on its negative watch list, citing the impasse in budget negotiations, government debt that is growing faster than fiscal revenue and a likely recession in the US in 2013 as reasons.

While the world is looking for leadership to fight years of economic recession, the US president and lawmakers have chosen to play chicken to gain advantage for their own parties, instead of for the American people and people in other parts of the world.

A Pew Centre survey shows that 49 per cent of the US public do not anticipate a deal to be struck before the end of the year, while 40 per cent do expect an agreement. Meanwhile, a Gallup poll reveals that 68 per cent of Americans believe that "fiscal cliff" measures would have a negative impact on their personal financial situation.

There has also been an outcry from the defence industry. There has been much hype about how sequestration from the "fiscal cliff" would cause a national security threat, despite the fact that the US military budget dwarfs the next 10 biggest spenders combined. The US spends six times more on defence than China, according to IHS Jane's Defence Budgets.

It is the irresponsibility of the US president and lawmakers that truly threatens the US standing in this world. By continuing their ugly fight to the very end of the year, they seem to be simply sending "Unhappy New Year" greetings to Americans and people in other parts of the world.

 

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