This Michael Roberts’ summary and analysis of the fiscal cliff agreement stage 1 agreement reached in the USA on New Years Day. Of interest and importance he highlights not just what is wrong with the Republican Austerian position and, also, the inadequacies of the “neolaboralist” position put forward by Democrats and supported, at least in part, by some progressive economists, eg Paul Krugman.

Michael Roberts Blog

So after months of argument, threats and dispute, the leaders of the US Congress duly trooped out before the cameras and said they have ‘saved America’s middle class’ from facing a steep fiscal cliff.  In reality, the politicians had turned the fiscal cliff into a fiscal farce.  As American Enterprise Institute scholar Norm Ornstein put it: “This fandango was an immense embarrassment,” calling it “cringeworthy.”  And “the fact that we are going to have another disastrous confrontation over the debt limit in two months, with the radical right wing of the House Republicans determined to send us over the edge if they don’t get their way, is actually frightening.” It was “the worst Congress in our lifetimes.”  Sarah Binder, another ‘expert’ on Congressional politics, described the politicians as “a Congress that can barely get its work done – especially when confronting the most important issues of the day”.

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