THE FISCAL CLIFF

While there is no Lorelei in the United States, it looks as if the members of Congress are heading toward the lure of their worst instincts and might sink the economy. The Republicans are a divided lot and the Democrats pander to their Schadenfreude. The President meanwhile has outmanoeuvred the Republicans and is playing cat and mouse with the House Speaker, who seems to be unable to control his troupes.

Frankly I think nobody comes out aggrandized, after this painful spectacle.
Maybe a last minute deal can still be achieved before year's end, avoiding the more
perverse, arbitrary consequences (automatic tax increase and cuts in vital programs), but any last hour arrangement in Congress risks to be short-lived as long as the sword of Damocles (the national debt) is hanging over the country.

The President is the only one who can still rise above the fray if he chooses to be a Statesman rather than a politician with a vendetta against the Republicans, who are sulking since they lost support and are waging a too personalized war against him. We do not find ourselves in a "tit for tat" situation, wherein sordid warfare rules. On the contrary, we have entered a danger zone which requires more than a band-aid.   It requires a structural bold intervention from the President, who received a popular mandate after all. A recession in the United States must be avoided at any cost. The implications would be worldwide.  Jeffersonian laissez-faire must make room for Hamiltonian interventionism. The Democrats, who are so eager to call upon regulation and federal supremacy, should stick to their guns for a good cause for once. The chief executive cannot be a voyeur for political gain when in the short-term too much is at stake.  Public opinion favors the President and blames the Tea Party, which has taken the GOP hostage. In those conditions the President should act fast, streamlining his current proposal and make it acceptable, if imperfect. A majority of Democrats and Republicans could support such a face-saving move. As a result, households could resume spending, manufactures will hire workers, Wall Street will get over uncertainty (stocks are tumbling already) and the world economy will not come to a halt.

Countries have to pay a price for being perceived as great. America should not have to face further downgrading or Greek jokes. Only the President can make a decisive move. If he doesn't, his inauguration might become a political farce, or better a funeral wake.  Unfortunately, in Washington posture and sound bites get more attention than resolution. The fiscal cliff is starting to look and feel more like a looming reality than an academic metaphor.  All actors in this political melodrama are running out of time.