HOW AMERICA'S FISCAL CLIFF POLEMIC FINALLY ENDED

After being stuck on dead end for long, ne­gotiations over budget between the White House and Chairman of US Parliament John Boehner was finally showing progress int the past few days. Both parties still had to synchronize their views of significant is­sues before finally arriving at an agreement expected to happen at year end.

Some controversial matters tike tax and America’s Health Service System, Medicare, were overshadowing the negoitiation. Each party had to find compromise to avoid dead end.

According to some resource, the discussions ran more significantly in the past few days after both sides communicated more intensively, however de­tails of the meeting agenda was still kept as secret.

Over the past few weeks, the Obama admin­istration and Republic Party were negotianing about ways to overcome tax cutting issues and slashing of state’s expenditure which would be effective by next year. The White House and Republic party had det forth proposals respectively in overcoming fiscal problems known as fiscal cliff.

The Republic Party wished that the Government axed state’s expenditure, a proposal rejected by the Democrat Party. Meanwhile the Democrat Party had proposed impose higher taxes, which was rejected by the Republic Party. All in all over the past few weeks disagreement broke out on whet had to be done to taxa­tion policies. Meanwhile leaders of the two poles were debating about ceiling of the state’s debt.

The indications of progress in the process of negotiation was that both parties agreed not to make array statement about the negotiation. Word was out that a member of the Republic Party said that in Con­gress, normally good progress in negotiation evident when both poles refrain from speaking to the public.

The Republic Party was waiting for Presi­dent Obama's step to determine the amount of bud­get slashing being agreed as an approach to balance promised to the people of America. However, the two poles remained optimistic about the prospect of mu­tual agreement between the two. This was reflected in President Obama’s statement that he wished to reduce deficit, but being done the balanced and re­sponsible way.

Previously both sides were doubtful that any agreement would be arrived at. The Republic Party was still guessing the extent of axing of state’ ex­penditure to be agreed by Obama while the White House was still waiting for the size of tax increase to be ugrred upon by the Republic Party.

In the end President Barrack Obama in his speech constantly called out to all people to support his tax policy, i.e. to increase taxes for the rich in America. This was to neutralize debate between the While House and the Republic Party in the US Con­gress which was still trapped in unending argumenta tion about policy package aimed at reducing deficit.

And yet America was facing a Fiscal Cliff in the a matter of weeks. The high ranking officials of the two poles were defending their respective posi­trons in interviews with some electronic media.

Heed of the US Congress John Boehrer said that the negotiation was not making any progress. Meanwhile US Finance Minister Timothy Gefthner who spoke in the name of the Government said that the Republic Party group needed momentary rest from the negotiation package on economic policy, however they would finally agree on increase of tax tariff. This was an important part of the US Government’s ef­fort to raise USD 1.5 trillion from lax for the next 10 years.

To them, the present situation was definitely difficult. They were trying to find out about the future directions. Probably the Obama administration would allow more room to know the next step. Boehner confirmed the Republic Party approved increase of tax tariff amounting to USD BOO million in 10 years.

However they were of opininion that the step must be taken by stopping some tax cuts, instead of increasing tax. In the eyes of the Republic party, if tax tariff were increased, economy would be hard to grow. Some income were derived from small busi­ness.

Open statement as such would be common practice in a negotiation, which means it was still a far cry from agreement. What was said by politicians in public open debates very often did not reflect what was said in a closed meeting. This time both sides were aware of the short time they had before axing of budget spending and tax increase of USD 500 billion started in January next year.

Members of the Congress of both parties stated that the series of closed meetings which was going on today was not productive, just like debates on TV. Policy makers set target to accomplish a two step agreement before year end. The first step was related to the intial stage of expenditure-slashing and changes in tax codes to be effective next year.

At the second phase, policy makers were obliged to revise the tax code of ethics and entitle­ment program of social welfare. Although both sides were persistent, Geithner and Boehrer and other nego. tiators signaled there was still room for negotiation to arrive at common agreement by year end.

The White House was still opening poten­tials for change toward realization of Medicare and Medicaid beyond the proposals set by the Republic party. However, the Republic Party was expected to come up with specific offer first. The agreemet included increasing age limit to above 65 years to oblige rich Americans to contribute more to their hos­pital care treatment, and to slowdown increase of Social Welfare liquidation.

Boehrer disclosed that the proposes revisions for Medicare service had been discussed with Presi­dent Obama in a meeting on 2011 last on increasing debt limit About that Social insurance, the program that gave benefits to retired employees and the dis­abled, Geithner stated that the White House was to discuss possible revisions. However, the revisions in the program could not reduce deficit.

Previously, the Republic Party set forth a new proposal for reduction of deficit to the White House in the form of tax increase amounting to USD 800 bil­lion, half of what was proposed by President Barrack Obama before. The White House spontaneously re­jected the proposal. However, the proposal signaled the limit to be approved by the Republic Party.

The offer was set forth a few days after the White House openened negotiations about their proposal. By initial offer from both sides, the parameter set by the two poles for further negotiation was get­ting clearer. The proposal being forwarded included prospects of slashing of Medicare en other health in­surance worth USD 600 billion in 10 years. Previ­ously Obama proposed a figure of USD 350 billion.

The proposal would clearly slowdown in­crease during liquidation of Social Insurance, the step most opposed by by most members of Congress of the Democrat Party. Among the content of package was on income from tax, which the Republic Party believed it could be pocketed without increasing tax tariff.

The Republic Party sent their proposal to the white House after getting Boehner’s signature and other leaders of the Republic Party including Head oil the Budgeting Committee is US Congress Paul Ryan. Paul had his objections to the proposal of tax increase either in time when he was still in Congress or when he was candidate of US Vice President flanking Mitt Romney. His support was important in all process of agreements.

In the end the polemics on Fiscal Cliff was expected to end well to both parties in the spirit of Win-Win solution. All not just for the sake of Ameri­ca's economic recovery but for rebound of the rest of the world. (SS)

Business News - December 19, 2012