This year may have started on a positive note for many investors. It appears that the American fiscal cliff issue has been resolved satisfactorily. Beyond reasonable doubt, the US’s debt burden was and still is a very urgent crisis which has to be tackled, in a way or another. Both the Democratic and Republican parties have successfully negotiated a deal in order to avoid the turmoil of another recession.
Interestingly, this dramatic news indicates that the two political parties are not as far apart in their fiscal and monetary mindsets. For example, both have agreed that the tax rates should rise for the highest earners, as they realised the majority of workers cannot afford to pay any additional contributions to the US coffers at this point in time. However, the two parties were very reluctant to tackle the debt burden in a serious manner. While the Democrats were genuinely unwilling to pursue any tough welfare reforms, the Republicans were hesitant about lowering the country’s defence budget.
Yet the parties should be applauded for their concerted efforts, as they have acted wisely for the sake of their country’s solvency.