Fiscal Cliff averted?

The Fiscal Cliff in the US has been averted after the US House of Representatives passed a Senate bill making sure that some Bush-era tax cuts for the middle class become permanent. The very wealthy, especially those earning over $450 000 had their taxes increased and the temporally payroll tax cuts were allowed to expire. There was a lot of debate as to how much President Obama was made give up given he was given a mandate by the voters in the elections of 2012 but in his statements he was seemingly pleased with what he got.

The bill passed by US lawmakers only touched on the tax and revenue side of the US fiscal problems. The spending part is most likely to be dealt with in February when President Obama present his budget. The debate about raising the debt ceiling is likely going to be held then. The spending part and raising the debt ceiling is likely to be a heated debate and Obama is going to find the going tough.

I was surprised with the IMF response which wasn't optimistic about the fiscal cliff deal but put more emphasis on dealing with the spending part. What the IMF and the like should understand is that these issues need to be dealt stage by stage and you have to understand. The overall goal should be sustainable growth. But the IMF seems to be following a failed prescription of being paranoid over 'dire' fiscal conditions. The austerity mantra has failed in Europe and the IMF should start from there. Focusing your thoughts on trying to bring about some short-term fiscal consolidation puts you at the mercy of the bond-holders which is just unnecessary and retrogressive

For progress to be achieved in America, failed political ideologies need to be put at rest and issues dealt at hand. Therefore 2013 is going to be quite interesting for sure . Let's not watch everything from the back seat, but be one of the drivers of the future because the future belongs to those who prepare for it now.