3 Jan 2013

Fighting talk on the edge of America's cliff

One of the things I learned as a correspondent living in America in the 1980s was that Democrats and Republicans were much more alike and interchangeable at the margins than their Labour and Conservative counterparts in Britain.


One of my best contacts was a remarkable senator from Connecticut – Lowell Weicker. He was a Republican, and yet so liberal that he was well to the left of most Democrat senators. Indeed, Weicker was eventually defeated by a Democrat, Joe Lieberman, well to the right of him, who served in the Senate until the last election. The issue that characterised their crossover politics was the Iraq War – Democrat Lieberman was one of its staunchest advocates, Republican Weicker hated every aspect of it. 

Yet today, we find American politics more bitterly divided on party lines than at any time in recent history. Indeed at the very moment when western democracy in Europe is characterised by centre ground coalitions – such as our own in the UK – the savage hatred between US parties is the worst I have ever known. The fiscal cliff debate has brought it classically to the fore. Republican politicians, loathing Obama’s re-election; their failure to win the Senate; and their diminishing demographic in the country are fighting like ferrets in a sack. And it all looks set to get worse. The cliff has merely been repositioned for another fight in six or seven week’s time. 

Pause a moment then for New Jersey’s Republican governor Chris Christie who broke with the Republican recent tradition and praised Obama’s handling of the response to Hurricane Sandy during the closing days of the US Elections. Now he’s turned renewed fire on his Party for its “bi-partisan failure”  in supporting a bill to bring relief to the battered residents of his state. Political students in the States will be watching to see whether Christie’s move inaugurates a new era of sanity for his party or whether the current politics of hatred are to sustain. 

All this as the true scale of what confronts America has yet to sink in.  The economist Paul Craig Roberts has written that the Fiscal Cliff requires the US to cut $1.3 trillion over ten years to sort the problem. But he goes on to quote from the US Comptroller of the Currency’s report from the 4th quarter of 2011 that 95% of the $230 trillion of US exposure is held by JP Morgan, Bank of America, Citibank, and Goldman Sachs.  

That is surely  something more like the edge of the planet than any cliff! 

Oh and by the way, the FT reports today that Goldman Sachs quickly paid out some $65 million in restricted stock options to ten of its top executives ahead of yetserday’s tax hikes agreed on wealthier tax payers under the fiscal cliff agreement.

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