01/02/2013 02:54 PM

The World from Berlin

Today's American Politics a 'Tiresome Farce'

Barack Obama's announcement that a deal to avert the "fiscal cliff" has been reached was hailed as a victory for the Democratic president. German editorialists, however, are less certain. They warn that the bitter political wrangling in Washingon is likely to damage the country in the long term.

Following a rancorous and protracted battle over fiscal policy, President Barack Obama announced late on Tuesday that the United States Congress had passed legislation to avoid the dreaded "fiscal cliff."

Had legislators in Washington failed to reach a deal, it would have meant big hikes in income taxes for the middle class and massive government spending cuts, likely sending the country into recession.

Some 24 hours after it was approved by the Senate, it was passed by the House of Representatives by a vote of 257 to 167, averting the automatic implementation of tax increases set to come into effect with the expiration of cuts enacted by former President George W. Bush. Voted for by a number of Republicans in the opposition, who were worried their stubborn refusals would be blamed for "fiscal cliff" fallout, it was seen as a victory for President Obama, who ran for re-election with calls for higher taxes for the wealthy.

"A central promise of my campaign for president was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans," Obama said in a short statement to the press. "Tonight we've done that."

Once Obama signs the bill, the country will no longer face the some $500 billion (€377 billion) in increased taxes and $109 billion in defense and domestic spending cuts that would have taken hold. Instead, it ensures that the existing tax cuts for most people remain in place, while the tax rate for incomes above $400,000 for individuals and $450,000 for couples will increase from a current 35 percent to 39.6 percent. Taxes will also increase for the wealthy on dividends, capital gains and inheritances.

Still, neither side of the aisle was particularly pleased with the deal, which is seen as a mere postponement of further budgetary negotiations in the coming two months after the new Congress convenes. While the Republicans were forced to accept higher income taxes for the wealthy and fewer spending cuts than they had demanded, the Democrats had hoped to increase taxes starting at an income level of $250,000.

On Wednesday, both Asian and European markets seemed to react positively to news of the deal, which lowered the risk of the world's largest economy falling into recession.

German editorialists were a bit less optimistic, however, writing that the political games in Washington are harming the country.

The conservative Frankfurter Allgemeine Zeitung writes:

"The annual ritual of expiring deadlines and compromises in the middle of the night has long since become a tiresome farce that no one is interested in seeing any longer. ... The political theater is damaging the country both domestically and abroad. Querulousness and anger are growing among the people because the national leadership in Washington isn't in a position to solve the country's biggest problems: the mountain of debt, the budget deficit, unemployment, the education crisis, aging infrastructure and the explosion of costs in the health care and pension systems."

"This political paralysis could stifle economic recovery. The national debt, which now exceeds the annual economic output of the country, also threatens national security. President Obama's first term was characterized by procrastination and retreat when it came to foreign and security policy -- from Iraq to Afghanistan to Libya and Syria. And without Washington's leadership, what is to become of the 'peace process' in the Middle East and the Arab Spring? Beyond the cliff the world faces more adversity than a world power taking a breather from geopolitics."

The conservative daily Die Welt writes:

"American politicians like drama. ... But this drama isn't soley the result of effective staging meant to show the voter base that they have tried everything and then only backed down to avert catastrophe. Indeed, America's fiscal problems are so complex, and the divide between Democrats and Republicans so deep, that a comprehensive agreement in the short time after the election was not even possible."

"The US budget can't actually be straightened out with tax increases for the rich alone. It will also require cuts to the biggest spending areas, which in addition to the military are mainly the galloping costs of the welfare state. In 2012, 44 percent of the US budget went towards paying for the welfare state, for health insurance for retirees (Medicare) and the poor (Medicaid). Given that the US population is graying and more and more people will be eligible for Medicare, this system can no longer be financed on the same scale as in the past. Essentially, America is more European than either Europeans or Americans think. Across the Atlantic, the economic crisis has opened up long-term structural deficits. And here too, the same phenomenon is emerging: In the postmodern Western democracies, the desire of citizens to receive social benefits is far more pronounced than their willingness to finance them with higher taxes."

"The recognition that things cannot go on without a curtailment in social spending has so far been eluded by Obama and as his party. Now the Democrats have two months to come clean to their constituents and get them used to a simple fact: Namely that the current level of spending is not financially feasible given what most people are willing to pay."

The left-leaning Die Tageszeitung writes:

"Precious little has been gained, particularly when it comes to implementing the platforms for which Barack Obama was re-elected in November -- even if the Republicans don't want to believe it. ... In Washington today, the main mission of politics is obstruction. All sides are acting as though the only conceivable form of politics is constantly relying on emergency measures in a panic."

"It will be a small political miracle if other means were used to resolve the next stage over the next two months, the deferred budget cuts and increase in the debt ceiling. Perhaps falling over the cliff could have helped matters there. But politicians knew to prevent that from happening."

The left-leaning Berliner Zeitung writes:

"Sure, Obama managed to save unemployment benefits for the long-term unemployed and avoided cuts to social and health benefits for the time being with the fiscal cliff compromise. But the ultimate decision over the cuts is far from being made. A year of endless negotiations over the debt ceiling and the unresolved budget issues awaits. The still fiscally conservative and resolute Republicans remain pitted against the still hesitant president, who remains hopeful of bipartisan cooperation. But even if Obama is now finally determined to fight their obsession with spending cuts, he'll still have to adjust to governing with less money soon."

-- Kristen Allen


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