The “Fiscal Cliff” and the Future of the American Economy
Coming out of the late 2000’s recession, it seems like the economy only has room to grow. Many experts agree, and Slate’s Matthew Iglesias claimed that whoever won the American election would look like a genius, as they would be presiding over a growing economy. However, the threat of the impending “fiscal cliff” is casting a gloomy shadow over the forecasts.
What is the “fiscal cliff” then? Essentially, the cliff is a combination of expiring Bush-era tax cuts, and decrease in social services (spending cutbacks to reduce the deficit), which would increase the burden on Americans across the country. Sure, the government will generate more tax revenue, but the decrease in spending money for the average citizen may be far too large a burden to bear.
As the Canadian economy is undoubtedly closely tied with the American economy, we have many a reason to be extremely concerned. Any decrease in demand from the American market would shock our export-driven economy, and as always, a threat to the American economy is a threat to the Canadian.
It seems that all possible alternatives to preventing the American economy from falling off the “fiscal cliff” involves increasing the still growing American deficit. Recalling the previous debt ceiling crisis, and the threat of another debt ceiling imminent, the United States are in financial hell.
Torn between increasing the deficit or burdening the average citizen with higher taxes, President Obama seems at a loss to fulfill his campaign promises, but all we can really do is to wait and see what the next move is.