The experts can’t agree about the Federal Debt

There are many respected commentators writing regular articles on the state of the US economy, the size of the Federal Debt and US Debt ceiling.  Most try to portray a non partisan approach because a perceived association with either of the main Parties will probably devalue the quality of their comment.

The facts are that the Debt ceiling as risen remorselessly over the decades although ironically it was a Republican, Robert Reagan, who was responsible for more rises than any other President, 18 in all. The Republicans, if it is possible to generalize, want less Federal spending and it is their majority in the House of Representative that has resulted in the current problems where the Obama Administration is seeking a more liberal approach to help the less fortunate in the USA and to introduce a mote caring approach to health.

There is a continual problem in the USA of balancing public desire for low taxes yet the expectation that life will be good.  The fiscal cliff was perilously close when an agreement was confirmed; the tax aspects of the fiscal cliff that would have been enacted were eliminated at the last minute. Similarly the spending that was scheduled as a result of previous decisions was able to be funded.

If agreement had not been reached, there would have been a $487 billion decrease in spending; that decrease has been reduced by two thirds yet the situation seems to stagger from crisis to crisis. There is no question that 2013 will be a difficult year.

Obama inherited an economy that was in trouble. The Collateralized Debt Obligation (CDO) crisis left Wall Street in turmoil. The problems spread worldwide and in the circumstances where the economies of the World are interlinked it needs more than a US perspective to restore any buoyancy at all.

While the US has growth it is yet to reach a level whereby it can reduce unemployment to an acceptable level, if any level is acceptable. Certainly pre crisis levels are some way off and that is accepted by all commentators who are trying to interpret how the coming years will develop and what the US Debt ceiling level will be to meet the public’s expectations.

The Obama Administration has seen the ceiling rise 6 times but that is in a single term so it may reach double figures before Obama leaves Office. That would certainly not be popular with Republicans, especially if it was because of more Federal involvement in some domestic policies which they oppose.

The young and old, through education and medicare, will be more comfortable with Obama’s approach and therein lies the problem that the Republicans face. If they are labelled as the Party opposed to the welfare US citizens can they have any real expectation of regaining the White House? They are already under pressure to increase the share of the vote in many minority groups in the Country, minority groups which are increasing in size.

There is a political dilemma and an economic dilemma. The coming year could be one of the most interesting in years.

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