For shoppers in New York how will a deal which avoids the effects of a fiscal cliff hit their pockets. Is it merely a sticking plaster on the US economy which has a debt of around 16.4 trillion dollars?
Under the deal, taxes would remain steady for those in the middle class and rise for high earners. Spending cuts totalling $24bn over two months aimed at the Defense Department and domestic programmes would be deferred. It is managing the economy not by numbers but politics. President Barack Obama said: “My preference would have been to solve all these problems in the context of a larger agreement, a bigger deal, a grand bargain, whatever you want to call it, that solves our deficit problems in a balanced and responsible way. That just doesn’t deal with the taxes but deals with the spending in a balanced way so that we can put all of this behind us just focusing on growing our economy but with this Congress that was obviously too much to hope for at this time.”
The precipice could still beckon. If lawmakers cannot pass the legislation the markets could once again turn sour. The economy is still recovering from the 2008/2009 downturn and it could stall again if Congress fails to fix it.