Main focus of Thursday, January 3, 2013

Relief at US budget deal

Obama signed the bill on the budget compromise into law on Wednesday evening. (© AP/dapd)

Stock markets in Europe and the US reacted to the deal in the US budget row with soaring share prices on Wednesday. The Senate prevented spending cuts and only raised taxes for top earners. This is a victory for Barack Obama over neo-liberal politics, some commentators say. Others accuse the president of using populist tactics to exploit the dispute.

Victory over neo-liberalism

With the tax on the wealthy Barack Obama has triumphed over neo-liberal politics, the left-liberal daily La Repubblica rejoices: "With the passing of his tax reform based on redistribution, Obama has scored a victory against a decade-old dogma according to which the recipe for wealth was 'less state, less taxes, fewer rules'. This neo-liberalism and its devastating consequences in the aftermath of the deep crisis of 2008 have ended as they should: with a paradigm shift. The victory of the president has met with the approval of the markets, which have bowed to the primacy of politics and see the United States as a leading nation with a clear, growth-promoting strategy. The globally positive reaction of the markets symbolises not just the relief of escaping danger, it also offers hope that a left-leaning economic policy can put an end in the current phase to the downwards spiral of debt, austerity programmes and unemployment." (03/01/2013)

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More from the press review on the subject » Fiscal Policy, » Financial Markets, » Tax Policy, » U.S., » Global
All available articles from » Federico Rampini

Raise taxes for the rich

Raising the income tax paid by top earners in the US is a step that was long overdue, the left-liberal daily De Morgen writes and criticises the idleness of Belgian policy makers in this area: "In our country any attempt at a fairer distribution of wealth is immediately labelled an 'envy tax' and stopped on the grounds that it would destroy any economic incentive to invest and prevent the magic trickle-down effect. But the statistics belie these arguments. True, the purchasing power of the Belgians has risen by 32 percent in the last 20 years, but at the same time the income gap has only grown: the percentage of the total income earned by the country's low earners, who make up 30 percent of the working population, has gone down from 11.2 percent to 8.3 percent. Meanwhile the percentage earned by the richest ten percent has gone up to 31.9 percent. The United States took 20 years to act against this trend and increase the obligations of its wealthiest citizens. How long will it take us?" (03/01/2013)

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More from the press review on the subject » Fiscal Policy, » Belgium, » U.S.
All available articles from » Yves Desmet

Compromise just delays matters

The compromise reached by the Democrats and Republicans only postpones the budget problems without truly tackling them, writes the conservative daily La Razón: "Obama has won some time but 60 days from now he will have to confront the harsh reality of a growing budget deficit and escalating debt. In recent years the US president has applied precisely the opposite recipe for overcoming the crisis as Merkel has in Europe. He has used public funds to stimulate the economy and invested huge sums in creating jobs. But the results have been less spectacular than he had expected because he has not managed to noticeably reduce unemployment and the economy has shown only very modest growth. Therefore Obama now faces the same problem as in the summer of 2011 when he had to reach a deal with the Republicans on maximum spending and increasing the debt ceiling. But this time his opponents won't accept any more prolongations or delays." (03/01/2013)

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More from the press review on the subject » Fiscal Policy, » Economic Policy, » U.S.

Obama settling for the soft option

Obama is evading his duty to push through a consistent austerity policy, the liberal-conservative Neue Zürcher Zeitung complains: "From a narrow-minded party politics perspective Obama can congratulate himself. He has achieved his goal of raising taxes for top earners for the first time in two decades. He has also managed to make the Republicans bite the bullet without having to resort to far-reaching spending cuts. Whether he will remain the winner in the long term is questionable, however. Future historians will perhaps write Obama off as a mediocre president who lacked the guts to end the convenience of accumulating more debt. As head of state it is his responsibility to prepare the nation for what it won't be able to afford in future. Instead, however, Obama prefers to adopt a populist approach, depicting the debt issue as a conflict between ordinary citizens and the rich." (03/01/2013)

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More from the press review on the subject » Domestic Policy, » Fiscal Policy, » U.S.
All available articles from » Andreas Rüesch

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