US Politics Analysis: A Late-Night Deal Averts A Government Shutdown

Yesterday was more about the posturing than the issues, and why President Obama kept well away from the fray. There was little for him to gain by getting involved in this initial skirmish in the much larger battles to come over America's economic future. As he stressed when the agreement was finally reached, and will repeat in his Weekly Address today, the final deal was a victory for bipartisanship. That is a slightly optimistic appraisal of yesterday's events --- it was more the consequence of neither party's leadership being confident of who would get the blame for a shutdown --- but it confirmed to the President that his best option for dealing with the stormy economic debates ahead is to adopt the role of mediator. And, as part of the same long-term scheme, Obama will keep the White House's powder dry for when it really needs to use the authority of the Presidency in opposing the Republican agenda for cutting government spending.

An exhausted Congress has settled for a headline compromise, once again punting the major ideological battles down the road.

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US Politics: Much Ado about Debt Ceilings, Balanced Budgets...and Shutdowns

With Treasury Secretary Geithner warning of a financial Armageddon if the debt ceiling is not raised soon, and Representative Paul Ryan insisting on the price the Administration must pay for Republican support for increasing that ceiling, it will be a stormy time ahead in Washington.

The turmoil in Washington does not stop there. This Friday, at midnight, the latest continuing resolution funding government operations expires. The consequence of Congress failing this week to agree on a budget for the remaining six months of this fiscal year, or not passing yet another temporary spending bill, is a government shutdown.

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US Politics: Beyond the Budget Dispute, A Crisis in Health Care

The starting point for the health care debate is that the US spent nearly $2.2 trillion, or $7,400 per person, on health care in 2007. To put that in context, $2.2 trillion is double the total of discretionary spending, which includes defense, in 2010, and itrepresents 16% of America's annual GDP.

Those numbers and percentages have been been rapidly rising in real terms over the last 40 years. The US spent $714 billion on health care in 1990 and $253 billion in 1980; as a share of GDP, health care has increased from 7.2% in 1970 to a projected 20.3% in 2018.

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US Politics: A Beginner's Guide to Reform of Social Security

Social Security and reform. Mention the two together, throw in references to "looming fiscal crisis" or deficit reduction, and just sit back and watch the hackles rise on various concerned parties. And understandably so; Social Security is the bedrock principle of a society that does not abandon the disadvantaged, the unlucky, and, yes, the profligate or irresponsible to an old age of absolute deprivation. Reform, especially when uttered by Republicans, conjures visions of soup kitchens for the retired, a fate that should await no citizen of a civilised society.

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US Politics: A Beginner's Guide to Tax Rate Reform

To tackle the deficit, the government must sharply curtail the $1.1 trillion it currently "spends" annually on exemptions and deductions in the tax code. To give that number some perspective: it roughly equals what America spends each year on discretionary programs --- including defense --- and is about 2/3 of the yearly deficit. If these “backdoor spending grants” for special interests are eliminated, the commission contends, marginal tax rates can be lowered to broaden and simplify the tax base while increasing government revenue. Controversially, much of this increased revenue would not be used to finance government spending, but would be dedicated solely to paying off America's debt.

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US Politics: Getting Serious on the Federal Debt?

The stakes involved in America's debate over the country's debt crisis were significantly raised last week. Senior lawmakers, and some of the figures involved with the President's deficit reduction commission, have decided that a passive role on the sidelines is no longer a winning strategy for forcing Congress and the White House to get serious about talks designed to solve the debt problem. In an appearance before the Senate Budget Committee on Tuesday, Alan Simpson --- one of the co-chairs of the commission --- warned that if the United States did not attempt to deal with the debt burden immediately then, sometime within the next two years, the nation would face its worse economic crisis in history.

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Wisconsin Re-Ignited: A "Monumental Act of Republican Folly" Renews the Battle over the Unions

UPDATE 1800 GMT: Live coverage of protests in Wisconsin against the measure ending collective bargaining rights for state workers, signed into law earlier today by Governor Scott Walker:

Watch live streaming video from theuptake at livestream.com

On Wednesday night, in a procedural move that surprised many, Republicans in the Wisconsin Senate Republicans passed their controversial bill ending collective bargaining rights for most state workers.

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EA's US Politics and Economy Special: A Half-Time Reality Check on the Federal Budget

It may be that those who are arguing the debt is unsustainable are just doommongers, panicked needlessly by deficits caused by this relatively short-term blip in the economy. Undoubtedly the present deficit numbers have been made worse by more people receiving benefits from the entitlement programs, and less people paying taxes. But, even recognising that possibility, the numbers being presented in various reports on America's fiscal future are sobering reading.

The issue is only going to grow in importance over the next few months, and the partisan extremes in both parties are readying themselves for the mammoth struggle ahead. What we have seen recently are petty squabbles compared to the brouhaha that will erupt when the Americans from The New York Times poll finally realise what is actually at stake in the forthcoming discussions on the debt crisis.

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US Politics: A Beginner's Guide to the Plans to Cut Government Spending

On Monday, the Tea Party Caucus held a meeting in Washington to discuss their potential approaches to a forthcoming vote, probably in June, on raising America's debt ceiling. No definite conclusion was reached by the Caucus, but here are the headline numbers, from the President's deficit reduction commission, that illustrate how the the debt burden in in the United States is forcing the political conversation in Washington....

In 2010, Federal Government spending was nearly 24% of the nation's GDP; a level not seen since the days of WWII. To cover this spending, the government raised tax revenues of 15% of GDP. In total, the difference between spending and revenue in 2010 –-- the deficit –-- stood at 9% of the value of all the goods and services produced in the economy, or GDP.

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US Politics: A Beginner's Guide to Reducing the Federal Government's Debt

This report issues a stark warning, supported by every member of the Deficit Reduction Commission, "The era of debt denial is over, and there can be no turning back. We sign our names to this plan because we love our children, our grandchildren, and our country too much not to act while we still have the chance to secure a better future for our fellow citizens." And the Preamble emphasises the Commission's belief that the American public are ready to discuss long-term fiscal solutions, as long as they feel that everyone is sharing in the pain. The report notes that; “In the weeks and months to come, countless advocacy groups and special interests will try mightily through expensive, dramatic, and heart-wrenching media assaults to exempt themselves from shared sacrifice and common purpose,” but stresses that. “The national interest, not special interests, must prevail."

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