US lawmakers say ‘yea’ to crucial debt deal
The House of Representatives has voted 269 to 161 to approve the debt- limit bill which was worked out by President Barack Obama and congressional leaders. The bill will now go to the Senate, the upper chamber of the US Congress, which is to vote on Tuesday.
The debt agreement will lead to at least US$2.4 trillion of cuts in federal spending over a period of 10 years, allowing American borrowing to continue.
The crucial vote was attended by Arizona Congresswoman Gabrielle Giffords, who was shot in the head in the Tucson massacre in January. The lawmakers applauded as Giffords unexpectedly appeared in the House.
The worst has been averted. It’s a step in the right direction, says Patrick Chovanec, professor at Tsinghua University’s School of Economics and Management in Beijing.
“It does take the US a significant step towards fiscal responsibility.”
The partisan bickering took the debate over raising the debt ceiling close to the August 2 deadline, sparking fears about the future of the world’s leading economy.
“In the long run the concrete results are actually going to be more important than the disruptive process,” notes Chovanec.
The professor explains that there is great debate and a lot of disagreement inside the United States on the issue. There are people who want smaller government and less tax and there are people who think that the government needs to step forward and take a more active role in the economy and tax the wealthy.
This debate about the debt deal is not so much about the role of corporations as about the role of grassroots voters across the country, he observes.
“What was driving this was the feelings of different people throughout the US and the big difference of opinion between them.”
According to Professor Chovanec, there is still a possibility of a downgrade of US debt because this compromise has not reached the level of saving US$3-4 trillion that some of the rating agencies said they wanted to see in order to avoid a downgrade.
“There still is some uncertainly.”
Chovanec claims that in order to turn the economy around the US government needs to cut spending and raise taxes.
However, the ultimate solution to the problem is to get the economy growing again, he explains.And that means thinking about productivity. It means thinking about wise investments, both public and private. And it also means thinking about what kind of tax system really make sense
“In the end there are no victories,” says Jason Johnson, a professor of Political Science at Hiram College.
He doesn’t think any of the wrangling between the Republicans and the Democrats has helped the job situation in America.
According to Johnson the whole situation is Washington’s fault as it could have been solved months ago.
“No one wants to claim victory over a bill that no one is really happy with,” he points out.
He adds that nobody is going to celebrate this bill, but there will be people saying “let’s move forward and try to get other policies through before the end of the year.”
Moreover, he predicts the debt deal will have a huge impact on the 2012 presidential campaign, but he believes that despite the fact that President Barack Obama has the lowest approval rate he has ever had, he can still recover if he can reassert his leadership and do something about the economy.
“The president has got to do something to re-inspire the public,” Johnson concludes.
The raising of the borrowing ceiling may deflate some of the immediate tension, but there is still great concern over America’s inability to deal with its overflowing debt, says Joseph Cheng, professor of political science at the City University of Hong Kong.
“The Obama administration certainly has been weakened. The major concern is that the whole international financial community is disappointed with the fact that the lowering of the long-term debt has not been resolved,” he told RT.
“Rating agencies earlier demanded a reduction of the long-term debt over a period of ten years by the amount of $4 trillion and now we see only a reduction of $2.4 trillion. It is also expected that deficit will amount to about $1 trillion next year – about 7.5 per cent of the GDP of the United States. So there is a certain loss of confidence in the United States that it cannot have the political will and the political consensus to seriously deal with the long-term debt issue,” he added.