US Politics Analysis: "Lies, Damned Lies, and Statistics" --- The Battle over "Stimulus" v. "Cuts"

Selection of certain statistics from the latest Budget report allows those in the political arena to make two wildly opposing arguments. There is a case to be made for the urgent need for another round of spending designed for growth and job creation. There is just as strong a case for drastic reductions in government expenditure, slowing America’s descent into unsustainable debt.

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US Politics Analysis: Can America Overcome "Deficit Fear" to Deal with Unemployment?

Senator Patty MurrayFor the last two years, debate over the deficit has dominated political discourse in Washington, driven by a Republican majority in the House. Along the way voters’ main concern --- policies that create jobs --- has been sidelined as Democrats have concentrated on defending the entitlement programs, primarily Medicare and Social Security, that Republicans have targeted for reform.

However, that may be about to change. Senator Patty Murray, the Democratic Chair of the Budget Committee, is not as respectful of the need to build coalitions as her predecessor. Murray is a conviction politician, and she feels her middle-class constituency is being betrayed by a callous GOP caucus more interested in abstract arguments about deficit reduction than the human costs of a damaged welfare system.

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US Politics Analysis: Why the Republicans Postponed the Showdown on the Debt Limit

On Wednesday afternoon the Republican-controlled House of Representatives passed a bill that extends the borrowing authority of the US Treasury to 18 May, even though the country’s legal debt limit has been reached.

Senator Harry Reid, the Majority Leader of the Senate, has indicated the bill will also clear his chamber without revision or amendment. With President Obama signalling he will not veto the measure, the fight in Congress over raising the debt limit -- originally set for late February, has been delayed until the summer.

An article at MSNBC summarised much of the initial reaction, "House GOP Cave Complete, Debt-Ceiling Suspension Passes." Allowing the debt limit to be raised, without securing spending cuts of an equal amount, the Republican leadership appears to have abandoned its hard-line stance of the threat of a debt default.Regarding this temporary extension as a “cave” is short-sighted at best, however, and it is just plain foolish at worst.

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US Politics Feature: Explaining the Next Fiscal Crisis...Coming To You in 6 Weeks

(Cartoon: Monte Wolverton)

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After the recent drama and supposed escape from the "fiscal cliff", two developing stories in Washington will affect the global economy. The first is whether Congress can pass measures to address three additional fiscal dilemmas, all of which need to be resolved by the end of March. The second, a vital sub-plot in the larger play, is the intentions and aims of the Republican-controlled House of Representatives.

Near the end of February, the US Treasury will have exhausted all contingency measures to avoid breaching the debt limit, currently $16.4 trillion, and the US will immediately default on 40% of its fiscal obligations. America could still afford to pay foreign debts through its continual receipts of tax revenues. It could even fund Social Security and other low-income payment programs...provided it is willing to make cuts such as the closure of the FBI.

As the talks on raising the debt limit reach the status of Urgent, Congress will also have to address the "sequestration cuts", delayed for two months by the fiscal cliff deal.

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US Politics Special: A 6-Point Guide to the "Fiscal Cliff"

President Obama calls on Friday for a resolution to avoid the "fiscal cliff"

See also US Audio Feature: So How Serious is This "Fiscal Cliff"? --- Scott Lucas with the BBC

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Editor's Note: As 2012 comes to a close, the emergency story in the US press is the "fiscal cliff". If there is no agreement by midnight, then tax cuts introduced by George W. Bush almost a decade ago will lapse, and funding of Federal programmes --- such as benefits for long-term unemployment and farm subsidies --- will be in jeopardy.

Discussions on Sunday were adjourned without agreement between the Obama Administration and Democratic and Republican leaders in Congress, despite Democratic concessions such as the raising of tax rates only on those making more than $450,000 a year and on an escalation of estate tax.

But as the haggling over details continues to the last minute, what are the basic economic issues? What happens if the clock strikes 12 and there is no dramatic resolution? EA's Lee Haddigan explains....

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US Politics Analysis: Trotsky's Icepick and the Fight within the Republican Party

House Speaker John Boehner speaks on Wednesday about the "fiscal cliff" negotiations

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The murder of Leon Trotsky at Stalin's behest in Mexico in 1940 --- with an icepick that made his ears burn --- has become synonymous with the tendency of supporters of the same political ideology to act more as enemies than friends. The history of Communist movements worldwide, and in the US, is rife with infighting and intrigue, splits and divisions.

Trotsky's Icepick has now reached the conservative movement in the US. The immediate sign is the division over how Republicans should approach the "fiscal cliff" negotiations, but there are also internal recriminations about how and why Mitt Romney managed to lose a winnable Presidential election.

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US Politics Analysis: Explaining the Fiscal Cliff and the Battle Over the "Taxpayer Protection Pledge"

Republicans are aware that President Obama has momentum on his side for increased tax revenues during the fiscal cliff discussions, but they believe that history and principle are on theirs. Will some of them break the Pledge to ensure that a compromise is reached? That has far more to do with if and how Democrats assure them over spending cuts than it does with media stories about their loyalty to one Grover Norquist.

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US Politics Analysis: Pushing Obama and Congress Towards the "Fiscal Cliff"

Federal Reserve Chairman Ben Bernanke talks on Tuesday about the "fiscal cliff"

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America's politicians are wrestling with a basic problem --- raise taxes or cut welfare spending --- and the interested and influential advocacy groups are unlikely to be accommodating. Thought organisations supporting Obama are shouting loudest now there is little doubt that, once Republicans have come to terms with their electoral defeat, conservatives will push back hard. This is a game which is only beginning and in which the President and members of Congress are far from the only players.

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US Elections 2012 Feature: The 7 Senate Races to Watch --- and Why They Are Important for the Next President

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The overall picture for the Senate then is that the Democrats should win Virginia, Wisconsin and Massachusetts to give them 52 seats. There are enough reasons to doubt Republican chances in Indiana and Nevada to suggest a Democrat might win one of those states, leaving a 53-47 majority.

But this is a Presidential election year, where Senate races are not as safe to call as in off-Presidential campaigns where the candidates stand or fall a bit more on their own merits. Republican faith in their theory of a lacklustre Democratic turnout may be nothing but a fantasy, but until the results start to confirm Obama's lead in the polls as reality, then Democrats face the possibility of losing the Senate as well as the White House. It is unlikely, but stranger results have happened in recent American political history.

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US Elections 2012 Feature: The Hope for a Romney Upset --- Voter Turnout

The bottom line is that the bookies and most political pundits have President Obama as their favourite to win this election. Paddy Power, an Irish bookmaker, has already paid out on an Obama victory.

However, until that result is confirmed Republicans are still holding out hope that the polls are wrong and that their voters, more committed to their candidate than Obama's supporters, will turn out in enough numbers to make a fool of not just Paddy Power but many of the "liberal" media as well.

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