US fiscal cliff threatens world economy: Swan
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.