米財政の崖 大統領と議会は回避へ合意を

The Yomiuri Shimbun (Dec. 24, 2012)
Obama, U.S. Congress must strike deal to avoid 'fiscal cliff'
米財政の崖 大統領と議会は回避へ合意を(12月23日付・読売社説)

Will the United States be able to avoid tumbling off the so-called fiscal cliff, which could lead to a drastic fiscal contraction and economic slowdown? We urge both President Barack Obama and Congress to compromise to reach an agreement as soon as possible.

In the last round of negotiations, the two sides abandoned their effort to resolve the problem before Christmas, which had been set as the deadline for a settlement. They plan to resume talks on Wednesday at the earliest.

The negotiations are expected to continue until the end of the year, but it remains to be seen if the two sides will be able to strike a deal by then. There are pessimistic predictions that the negotiations will go into next year, which we consider a terrible development.

The fiscal cliff refers to the expiration of tax cuts introduced during former President George W. Bush's administration and mandatory spending cuts that will kick in Jan. 1.

Failure to reach an agreement this year could result in a fiscal contraction of up to 503 billion dollars (about 42 trillion yen) a year, pushing down real gross domestic product growth by about 3 percent.

In that event, the U.S. economy would almost certainly enter a recession, which would deal a serious blow to Japan and the rest of the global economy. It is natural there are growing concerns on the New York Stock Exchange and elsewhere.


Taxing the wealthy

The biggest sticking point in the talks are tax cuts for the wealthiest Americans.

Among the tax cuts introduced by Bush, Obama has consistently called for ending tax cuts for wealthy households earning more than 250,000 dollars (about 21 million yen) during and after the presidential campaign. This is aimed at focusing tax cuts on the middle-class and reducing fiscal deficits.

The Republicans, however, oppose tax hikes on the wealthy, calling instead for extending across-the-board tax cuts.

Obama recently offered a compromise by proposing higher tax rates for Americans making more than 400,000 dollars, which is seen as a positive sign. The proposal is commendable as it shows his willingness to bring the stalled negotiations to a close.


GOP softens stance

Republicans have also softened their stance, putting forward a plan to allow taxes to rise only on households making more than 1 million dollars a year. However, some party members still strongly oppose raising taxes for any high-income earners.

Although their positions are still wide apart, we hope both sides will compromise.

The president and Republicans are also at odds over the scale of spending cuts in social security and other fields. In summer last year, the U.S. government managed to raise the federal debt limit. As the federal debt is likely to reach that limit as early as the beginning of next year, this problem has become another focus of attention.

Some people are calling on the president and Congress to reach a "small deal," under which the two parties will initially compromise on certain points. This proposal is worth considering to avert the worst.

The U.S. fiscal deficit has topped 1 trillion dollars for four consecutive years, the nation's unemployment hovers at a high level and economic recovery has been delayed.

In January, Obama will start serving his second term, and a newly elected Congress will take office. But the country still must confront the difficult challenges of realizing thorough fiscal reconstruction and economic growth at the same time.

(From The Yomiuri Shimbun, Dec. 23, 2012)
(2012年12月23日01時31分  読売新聞)

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