Thursday, January 10, 2013

Roubini : The longer-term picture for America is bleaker still

Nouriel Roubini : "If no action is taken by March 1, $110bn of spending cuts will commence, and at about the same time, the US will hit its statutory debt limit, known colloquially as the debt ceiling," he said. "Later in 2013, a bigger debate on medium-term fiscal consolidation will begin. This will lead to another dispute between Republicans, who want to shrink the size of the federal government, and Democrats, who want to maintain it but are unsure how to pay for it." "The longer-term picture is bleaker still. The reality is that America is yet to wake up to the full extent of its fiscal nightmare," "Neither Democrats nor Republicans recognize that maintaining a basic welfare state, which is right and necessary in our age of globalization, rapid technological change and demographic pressure, implies higher taxes for the middle class as well as for the rich. "A deal that extends unsustainable tax cuts for 98% of Americans is therefore a Pyrrhic victory for Mr Obama." - excerpts from his recent article in the Financial Times
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