US lawmakers have made very little progress over the past week after failing to achieve a compromise over the methods needed to avert the world’s biggest economy falling over the ‘fiscal cliff’.
The USA’s two main political parties the Democrats and Republicans have clashed over aspects of the proposed scheme with Republicans advocating an increase in federal tax revenue by limiting cuts rather than by raising tax rates for the nation’s highest earners, a view not shared by their Democrat counterparts.
The ‘Fiscal cliff’ will see the USA slash its budget deficit in half next year a move that economists fear will plunge the country and the world back into recession. Closing the gap too quickly could spell disaster for the global economy. The Congressional Budget Office has said a failure to avoid the fiscal cliff could lead to a recession and a jobless rate of about 9 percent, compared with the October rate of 7.9 percent. Federal Reserve Chairman Ben S. Bernanke said on the 20th of November that the fiscal cliff would pose a “substantial threat” to the economic recovery.
The lack of progress has caused a lot of uncertainty in the US business sector.
“There’s a great uncertainty that’s just hanging over the entire economy because we’re not confident that our guys can govern anymore,” David Cote, chief executive officer of Honeywell International Inc. said yesterday on NBC’s “Meet the Press.”
“There’s a lot of money on the sidelines that people are willing to invest,” Cote said. “People like me just aren’t hiring now because we’re not confident they can do it.”
The US lawmakers still have one month to come to an agreement if they don’t then we could see the global economy come under massive pressure once more and the US slide into recession.
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