Monday, August 1, 2011

U.S. debt: an agreement and concessions

New York Correspondent - If all goes as hoped the White House, the Republican majority in the House of Representatives, Democrats and their counterparts in the Senate, the U.S. will avoid a default Tuesday, August 2. The agreement on raising the U.S. national debt, Sunday, July 31 at night, after a negotiation with a line, should be adopted by Congress.

However, much more than saving the planet from a new financial earthquake potentially dramatic, the first question that preoccupied the American commentators, once the agreement announced, was to identify which, politically, the winner. The deal is indeed seen as a product of Washingtonian politics.

Even before it is initialed by the legislature, which is not yet vested in the House, and its final terms are specified, each trying to present the agreement as favorable to his camp at the opponent, whether the president, Barack Obama, the Democratic majority leader in the Senate, Harry Reid, or the Speaker of the House, Republican John Boehner.

Obama wanted a raising of the debt large enough to last him and avoid having to submit to a new negotiation on the campaign trail. He wanted, too, that massive reductions in public spending (4,000 billion dollars, 2,800 billion) are offset by a recovery of the 2% tax on the wealthiest Americans at the level it was before President Bush, to generate new tax revenues that will preserve a bit of coverage and the "big challenges ahead" (education, research) of the inevitable budget cuts that these posts will soon undergo.

The Republicans, themselves, intended to "cut" much in the way of life of the state (4 000-7 800 billion in just ten years according to plan), without adding a penny tax on income anyone. And they preferred an interim agreement allowing a minimum increase of the ceiling for a short period (until March 2012) and pushing the key schedule for later, a tactic to reopen the debate on debt at a new inescapable increase of the ceiling in March, when the campaign really started.

The "framework" of compromise, with more modest ambitions, would be: - the debt ceiling would be raised to 2 100 billion at least, so that the U.S. commitment will be provided until 2013 (it that markets were waiting) - 900 to 1 000 billion in spending approved by negotiators would cut federal budgets on the next ten years, including 350 billion reduction in defense spending, a subject far taboo in the eyes of Republicans - a further reduction in costs of at least 1 500 billion over the decade (the sum of 1 800 billion is also referred to) will then be released by a bipartisan commission of Congress.

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