US fis­cal cliff threat­ens world econ­omy: Swan

The Pak Banker - - Front Page -

SYDNEY

The US needs to end its po­lit­i­cal grid­lock in or­der to avert the so-called fis­cal cliff that is jeop­ar­diz­ing a “frag­ile” re­cov­ery in the global econ­omy, Aus­tralian Trea­surer Wayne Swan said.

“With­out ac­tion by Congress, the con­se­quences would be very grave,” Swan said in his e-mailed weekly note to­day. “The world can­not af­ford to see a con­tin­u­a­tion of the grid­lock that has be­dev­iled the U.S. po­lit­i­cal sys­tem in re­cent years.”

Pres­i­dent Barack Obama, claim­ing a man­date from vot­ers af­ter his Nov. 6 re-elec­tion, faces op­po­si­tion over his call for an im­me­di­ate tax-cut ex­ten­sion for peo­ple earn­ing less than $250,000 and in­sis­tence that top earn­ers pay more.

The U.S. faces $1.2 tril­lion in man­dated spend­ing re­duc­tions and tax boosts over a decade start­ing Jan. 1 should Congress fail to agree to re­duce the U.S. deficit, which to­taled $1.09 tril­lion in fis­cal 2012. Obama has of­fered no pub­lic con­ces­sions to House Speaker John Boehner, who has cited pub­lic sup­port for the re-elected House Repub­li­can ma­jor­ity for his stance of back­ing no in­creases in tax rates. Obama and Boehner will meet at the White House Nov. 16, along with House Demo­cratic Leader Nancy Pelosi, Se­nate Ma­jor­ity Leader Harry Reid and Se­nate Mi­nor­ity Leader Mitch McCon­nell.

Swan, who held dis­cus­sions with Trea­sury Sec­re­tary Tim Gei­th­ner and Fed­eral Re­serve Chair­man Ben S. Ber­nanke in Wash­ing­ton last week, called for the Democrats and the Republicans to work to­gether to avoid the cliff.

“Congress must heed Pres­i­dent Obama’s call to work to­gether to find com­mon ground and get the U.S. bud­get back on a sus­tain­able long- term track while also con­tin­u­ing to sup­port jobs and eco­nomic growth,” Swan said.

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