PH, others have stake in US fiscal cliff pact - economist
MANILA, Philippines - Middle income countries like the Philippines, not the poorest of the poor, will likely be affected if both Democrats and Republicans do not reach an agreement on US President Obama's "fiscal cliff offer."
This is largely due to the trade links between the US and the middle income countries, stressed James Robinson, a renowned political scientist, economist and author of the book 'Why Nations Fail', during an interview with Rappler on Monday, December 3.
"Mostly it impacts middle income countries. Most poor countries don't export anything to the United States. Japan does, China does, Latin American countries export commodities. The poorest of the poor--the Central African Republic, Mali, Niger, they don't export anything to the United States at all," Robinson said.
The fiscal cliff offer refers to US President Barack Obama's plan to raise $1.6 trillion in new taxes over the next 10 years. This will almost double the amount if tax breaks to the wealthiest Americans will expire.
The full interview of Rappler CEO Maria Ressa with Robinson will be featured in Rappler's #TalkThursday on December 6.
Despite this threat and the heated debates at the US Congress, Robinson believes that an agreement between Democrats and Republicans will be reached on the fiscal cliff.
Robinson said there has been many instances when both parties seemed to be at a stalemate on a certain issue but they eventually come to some form of agreement.
One instance when this became evident was in the passage of the auto industry bailout at the height of the global financial crisis. The debates at that time were heated but eventually, the US Congress passed the bailout package.
"I'm sure at the last minute, there's a compromise. It's happened many times. If you look at the last decade, every year, there's a crisis like this and it goes down to the wire and then they make an agreement," Robinson said. - Rappler.com