"In narrow
partisan terms, Obama can congratulate himself. He has achieved his goal -
raising taxes on the highest earners for the first time in two decades. He has also
managed to shove this deal down the throats of Republicans without having to offer
wide-ranging cuts. Whether he emerges victorious in the long term, however, is
questionable. Future historians will perhaps one day judge Obama as a mediocre
president who lacked the necessary backbone to end this period of easy debt
making. ... If Obama and Congress have already required countless nights of talks
for such lackluster decisions, how will they ever rise to the really tough
challenges?"
With the agreement on new Year's Day, the United States managed
to retreat from the edge of the "fiscal cliff." But those who wish to
sit back and breathe a sigh of relief should first read the fine print. To be
specific, it would be a mistake to believe that America has restored any
measure of security. In fact, the country is hardly closer to resolving its
financial problems. Fixing on the date of January 1st, with its automatic tax
increases and spending cuts, attention was diverted from the real danger, which
is the household budget hole that has already been dragging Americans down for years.
Although there can be no doubt that the annual accumulation
of a $1 trillion deficit will lead to ruin, the political elite refuses to accept
the consequences. The negotiations of the past few weeks could have offered an
opportunity to turn things around. Aware of its own irresponsibility, six
months ago Congress set a deadline of the end of 2012, after which automatic
cuts would come into force if no other budget cuts were found. This fudge of a compromise
gave lawmakers an excuse to avoid the difficult decision again. Almost the entire
population will continue to pay the current low tax rates, as the deadline
for spending cuts has been postponed for another two months. The country still
lacks a decent budget for the current year, and the central problem of an unaffordable
welfare state has yet to be addressed. If President Obama and Congress have
already required countless nights of talks for such lackluster decisions, how
will they ever rise to the really tough challenges?
In narrow partisan terms, Obama can congratulate himself. He
has achieved his goal - raising taxes on the highest earners for the first time
in two decades. He has also managed to shove this deal down the throats of Republicans
without having to offer wide-ranging cuts. Whether he emerges victorious in the
long term, however, is questionable. Future historians will perhaps one day judge
Obama as a mediocre president who lacked the necessary backbone to end this
period of easy debt making. They will say that his responsibility as head of state
consisted of preparing the nation for what it could no longer afford. But instead,
Obama preferred to represent the debt issue in a populist way to deepen the
divide between ordinary citizens and the rich.
In this respect, at least some good may come out of this New
Year's Day resolution: Americans will soon realize that despite higher taxes on
top earners, the hole in the Federal Treasury will not be much smaller. This may
force people to understand that the campaign against “privileges for the rich”
was nothing more than a red herring, and that for Democrats, there is no way of
avoiding painful austerity.
