Austerity averted in US

Country hauled back from the fiscal cliff.

At 10:59 PM EST yesterday, the US House of Representatives voted 257-167 to pass a bill originating in the Senate to prevent the government from being forced to implement a damaging mixture of spending cuts and tax rises – popularly known as the fiscal cliff.

To understand how much of a misnomer that title was, consider this: The US had already gone over the "cliff" at midnight on 31 December, 23 hours before the House passed its preventative bill.

The cliff was in fact the date at which the United States would, unless it passed new legislation, implement a series of European-style austerity measures. While these all became law at the stroke of midnight, implementation was to be phased out throughout the next few months. Unemployment benefits would have been cut within a week, while the full tax hikes – caused by the automatic expiration of Bush II's tax cuts – were to have taken several more months to implement. If we must keep the cliff metaphor, then the plummet was slow enough that the House was able to throw a rope down a day later and haul the nation back off the precipice.

Not that everything is peachy. The compromise that the Democrat- controlled Senate and the Republican-controlled House came to was 154 pages of legislation, but still involved kicking a couple of hand-grenades down the road.

Included in the bill was:

  • an agreement to return taxes to Clinton-era levels for families with income above $450,000 (a compromise between the Democrats' desire to do so above $250,000 and Republicans' desire to do so above $1m – or preferably not at all)
  • a similar rise in capital gain and dividend tax above that threshold
  • another rise in estate tax above that threshold (although, for no good policy reason, the estate tax threshold and only the estate tax threshold is to be indexed to inflation)
  • a civil service pay-freeze
  • unemployment benefits extended for another year
  • The Alternative Minimum Tax, which was intended to impose high taxes on the rich but has been affecting more and more middle-class families, will be "patched" to prevent any further mission-creep.
  • And an extension of Obama's tax breaks for low-income households.

In other words, nearly every measure extended yesterday was a tax break, with the exception of the three headline tax rises. There were also – because there always are – a host of other smaller measures added to the bill to ensure its passage. Joe Weisenthal finds six, including tax breaks for Puerto Rican rum and market loss assistance for asparagus farmers.

But two things weren't dealt with yesterday, instead booted down the line. On 1 March, the "sequester" will be enacted. This is the bundle of spending cuts agreed to in summer 2011 as part of the deal which raised the debt ceiling. It is similar in degree to the spending cuts implemented by the UK coalition, and most of the American establishment – the Republican party excepted, as usual – appear to have learned from the lesson Cameron provided, and have no intention to enact austerity in the midst of a depression.

The second fight due to come is over the debt ceiling. Exactly the same debt ceiling which was "dealt with" by enacting the sequester. The ceiling was raised – not abolished – and current Treasury projections suggest that it will have to be raised again in about two months.

The battlefields are drawn, in other words. The White House wants the sequester and debt ceiling extended or abolished; the Republicans want the sequester – and probably further spending cuts – enacted, and are prepared to see government spending hit the ceiling to do so. And unlike the "fiscal cliff", the debt ceiling is a real cliff. If the US hits it, a full government shut-down is required to stop it defaulting on its bonds.

The comparison with the UK is fascinating. Much has been made of the fact that the fiscal cliff, which has taken so much effort to avoid, is more accurately called "austerity"; but while the US legislature has been hosting fake debates in which the Republican party pretends it is fine with the whole thing and the Democrats pretend they don't want to negotiate, there is broad understanding in the rest of the US establishment (including the media) that to do so would be a very bad thing. That serves only to highlight how strange the UK right is in persisting in its defence of austerity. So while it's for the best for the US that it prevented the crippling austerity, it does mean that the evidence-based debate in Europe is deprived of yet another data point showing the damage such policies do.

Republican Speaker of the House John Boehner. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Does the UK care enough about climate change to admit it is part of the problem?

The government’s energy policies make can make it hard to decipher its commitment to emissions reduction.

“People tell me it’s ridiculous to be flying for a climate change project but you have to get real with it, I mean I can’t cycle across the Southern ocean,” says Daniel Price, an environmental scientist from London. As founder of Pole-to-Paris, Price is about to complete a 17,000km bike ride from the Antarctic to the Arc de Triomphe.

Price came up with the idea in an effort to raise public awareness of COP21, the UN Climate Change Conference taking place in Paris next week. During the trip he’s faced a succession of set-backs: from the discovery that boats were prohibitively expensive, to diplomatic tensions scuppering his Russian visa plans. Yet the darkest moments were when he became overwhelmed by the magnitude of his own mission. “There were difficult times when I just thought, ‘What is the point of this’?” he says. “Cycling round the world is nowhere near enough to engage people.” 

As world leaders descend on Paris, many questions remain unanswered. Not least how much support developing nations will receive in tackling the effects of climate change. New research commissioned by Oxfam claims that such costs could rise to £1.7tn a year by 2050. But with cuts kicking in at home, the need to deliver “climate justice” abroad feels like a bigger ask than ever.

So does Britain really care enough about climate change to accept its full part in this burden? The government’s energy policies make can make it hard to decipher its commitment to emissions reduction. In September, however, it did pledge £5.8bn from the foreign aid fund to helping poorer nations combat climate change (twice that promised by China and the United States). And there’s evidence to suggest that we, as a public, may also care more than we think.

In America attitudes are much darker; in the dismissive words of Donald Trump “It’s called the weather”. Not least since, as a recent study proves, over the last twenty years corporations have systematically spread scepticism about the science. “The contrarian efforts have been so effective," says the author Justin Farrell, a Yale sociologist, "that they have made it difficult for ordinary Americans to even know who to trust.” 

And what about in China, the earth's biggest polluter? Single-party rule and the resulting lack of public discussion would seem to be favouring action on the environment. The government has recently promised to reach "peak" emissions by 2030, to quadruple solar installations, and to commit $3.1bn to help low-income countries adapt to the changing world. Christiana Figueres, the UN’s chief climate official, has even lauded the country for taking “undisputed leadership” on climate change mitigation.

Yet this surge of policy could mask the most troubling reality of all: that, when it comes to climate change, the Chinese are the least concerned citizenship in the world. Only 18 per cent of Chinese see the issue as a very serious problem, down 23 percentage points from five years ago, and 36 points behind the global median.

A new study by political economist Dr Alex Lo has concluded that the country’s reduced political debate could be to blame for the lack of concern. “In China popular environmentalism is biased towards immediate environmental threats”, such as desertification and pollution, Lo writes, “giving little impetus to a morally driven climate change movement”.

For the international community, all is well and good as long as the Chinese government continues along its current trajectory. But without an engaged public to hold it to account there’s always a chance its promises may fade into thin air.

So perhaps the UK’s tendency to moan about how hard it is to care about the (seemingly) remote impacts of climate change isn’t all bad. At least we know it is something worth moaning about. And perhaps we care more than we let on to each other.

Statistics published this summer by the Department of Energy and Climate Change reveal that three quarters of the British public support subsidies for renewable energy, despite only 10 per cent thinking that the figure is that high. “Even if the public think the consensus is not there, there are encouraging signs that it is,” says Liz Callegari, Head of Campaigns at WWF. “Concern for climate change is growing.”

As Price puts it, “You can think of climate change as this kind of marathon effort that we have to address and in Paris we just have to get people walking across the start line together”. Maybe then we will all be ready to run.

India Bourke is the New Statesman's editorial assistant.