US Debt Law to Hurt Poor Sectors

Washington, Aug 4 (Prensa Latina) Legislation raising the ceiling of the US debt -with which a catastrophic moratorium was avoided- will affect poor sectors of the country, experts said here.

Although US President Barack Obama proposed some adjustments to public health plans for the elderly and a change in the tax code to make rich people pay more, it is yet to be seen whether the Republicans will accept this latter proposal.

The new legislation might rewrite the rules on agricultural subsidies, land tax administration and new generation biofuels, also fostered in the governmental agenda.

“We will have to accept that agriculture should contribute to deficit reduction,” said Senator Kent Conrad, president of the US Senate Budget Committee and a member of a panel studying the agreement.

The lifting of the US debt ceiling in the Senate on the same day the country was about to go into default because of the lack of an agreement between Republicans and Democrats, now opens many questions, in the opinion of social activists and politicians.

The negotiation on the limit of the debt and the reduction of the fiscal deficit has paralyzed other projects in the White House’s agenda and hardened the Republican position to delay everything that would favor Obama’s reelection plans.

Starting from now, any initiative -no matter if it is about free trade treaties with countries like Colombia, Panama or South Korea, or linked to migration and other issues- will have to wait until September, after the summer recess.

The plan to cut the deficit, which might include a tax reform so that rich people would pay their just share of taxes, is essentially a long-term plan.

Obama reiterated his position to eliminate subsidies for oil and natural gas companies, and the gaps allowing multi-millionaires to pay less taxes than teachers or nurses, but he will still face strong opposition from the Republicans.

Although Obama managed to increase the level of the US debt enough to maintain government financing until 2013 and to reduce the increase of the Pentagon´s budget, it is clear that Republicans still lead the political beat in the US.

Republican Party leader in the US Senate, Mitch McConnell, said they had to accept less than what they really wanted, but what they got is not insignificant at all.

For Republicans, cutting expenses will create more jobs, but economists in Wall Street warned that the cost-cutting measures will have a negative impact on the US economy.

However, US Congress members from the most Republican conservative wing, the Tea Party, opposed the agreement and keep insisting on more cuts.

Meanwhile, on the other side, liberal Democrats were upset, because the legislation does not include tax increases for the richest people.

The most significant feature of this new legislation, apart from the raising of the US debt ceiling until 2013, is that Obama will not have to worry about this issue during his reelection campaign.

However, the budget will be a hot topic in the next presidential and congressional election campaigns, and will produce hard and heated negotiations.Ω

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s