With a dramatic showdown in congress, the USA avoided the fiscal cliff just in time and calmed the world's financial markets. But president barack obama wins only a reprieve with compromise in u.S. Budget dispute. For at the same time, politicians in washington prepared the stage for a bitter dispute over the gigantic national debt.
After the senate, the house of representatives on wednesday night also approved the compromise between democrats and republicans that stops automatic tax increases for millions of americans. According to economists, this has averted the danger of recession, which has been a topic of discussion for months. Now, however, within a few months, an agreement must be reached on massive spending cuts.
Financial markets reacted with relief to the settlement of the long-running budget dispute. Obama also buried the agreement that fulfills his most important election promise: higher taxes for top earners. Overall, however, the plan adopted is only a first step towards making the US economy stronger.
Obama urged congress to address deficit issues in the future "with a little less drama, a little less recklessness, and without scaring people so badly" to be addressed. That very night he flew back to hawaii, where his family is still on vacation.
Cuts in social programs
Until the end it was extremely uncertain whether the bill would actually pass. The higher taxes for top earners pushed through by obama were a particular thorn in the side of many republicans. In addition, they wanted to enforce greater savings in order to print the high U.S. Debt. In the end, the republican-dominated house of representatives voted 257 to 167, a very rough majority, to pass the budget.
Conservatives will now fight tooth and nail to cut government spending. Obama has promised a balanced approach to the budget problem; he will be held to that promise, said republican house speaker john boehner. This includes "significant spending cuts and reforms to social programs that are driving our country deeper and deeper into debt. Representatives of the right-wing tea party movement, which wants to limit the role of the state to a minimum, spoke of a "disaster, because too much money continues to be spent.
After the budget compromise, another fierce tug-of-war is already looming over the savings plan that was due in the spring. U.S. Treasury secretary timothy geithner announced that the u.S. Had reached its debt ceiling of $16.4 billion by the end of the year. According to geithner, this means that budget reallocations will now begin so that the state can remain solvent for at least two months.
Obama warns against raising credit limit
This means that congress will have to raise the debt ceiling by the end of february or the beginning of march at the latest – precisely when the comprehensive austerity program for deficit reduction, which has now been postponed for the time being, is to be redefined. Obama warned the republicans urgently against making the increase in the credit limit a subject of negotiation and thereby possibly plunging the USA into insolvency: "the consequences for the entire world economy would be catastrophic. Much worse than the impact of a fiscal cliff."
Actually the 31. December as the deadline by which an agreement should be approved. To the 1. January saw tax increases for everyone and massive spending cuts across the board in the budget. But the immediate consequences were mild, because the international financial markets were closed on new year's day. Experts had feared turbulence on the markets and stock exchanges if there had not been a last-minute solution. Then came the settlement.
Despite warnings from economists, the compromise was celebrated on the international stock exchanges with powerful gains. The german stock index dax climbed to its highest level in five years on wednesday. Oil, gold and the euro also gained. In new york, the leading u.S. Index dow jones industrial was up almost two percent at the close of european trading.
Germany's leading business associations also expressed their approval, but see the U.S. As still a long way from reaching its goal. From the point of view of bernhard welschke, USA expert at the federation of german industries (BDI), the compromise is not even half the battle, but at best a first step. It remains unclear how the escalating national debt is to be contained, he told dpa. Ilja nothnagel of the german chamber of industry and commerce made a similar statement: "there is no way around a long-term strategy to get out of debt."