Americans like two things in their entertainment: tense, down-to-the wire climaxes; and sequels. Last night’s resolution to the debate surrounding the so-called fiscal cliff provided both. Several anxious hours after the “official” deadline marking the edge of the fiscal cliff, the U.S. Congress passed legislation to avert the worst of the enormous tax hikes that would have occurred as the Bush-era tax cuts of 2001 and 2003 were set to expire on January 1. The bill made it through the Senate by a vote of 89 to 8 and passed the House of Representatives with a margin of 257 to 167. Overall, the impact of the agreement is slightly friendlier than we anticipated, though still leaves room for a sequel of sorts: two more months of policy uncertainty regarding the spending side of the cliff debate (this will coincide with a likely standoff over raising the government’s debt ceiling too). We’ve written a bit more here, but theses are some of the broad strokes.
Posts tagged ‘Obama’
Another election cycle is over, though with over US$6 billion spent on the various campaigns across the country, the political landscape looks practically the same today as it did yesterday. This, I fear, may be the outcome the U.S. economy could most ill afford at this time. While President Obama’s reelection delivers clarity on a few issues important to the economy, the partisan status quo that remains in Congress likely raises the risk of recession.
First, the clarity. With Romney out of the equation, President Obama’s signature health care reform is probably cemented in place. You can debate the economic impacts of the legislation, but at least businesses and individuals will know that it’s here to stay and can begin forming up plans to adjust to the new health care regime. Next, Fed chairman Ben Bernanke still has a job…if he wants it. Governor Romney had pledged to remove Bernanke from his post when his second term expires in 2014. This probably ensures that Bernanke’s easy-money policies will continue, even if he declines a third term.