UK: America's economic recovery in the hands of Congress

The Economist

Cliffhanger

Ben Bernanke has done his bit to help the American economy. Now the politicians must do theirs

Both Republicans and Democrats agree that the cliff must be avoided. But they have radically different ideas about how to do so, and are thus leaving it until after the election. For a business trying to plan ahead, delay makes no sense. The elements of what should be in a deal are obvious. America urgently needs a medium-term plan that both raises revenues by reforming taxes and arrests the long-run growth of spending on entitlements such as pensions and health care for the elderly (Medicare). It also needs the process to be gradual. Accomplishing this will require the Republicans to erase their red line against raising taxes, and the Democrats to erase theirs against touching Medicare benefits. If they do not agree to that, there is nothing Mr Bernanke can do to help them.

Read it at The Economist:
http://www.economist.com/node/21563314