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Editorial: Obama's second term will be shaped by fiscal cliff


August 25. 2013 1:15AM
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The Lima News



Battered, bruised but not beaten, President Barack Obama can sit back today with the knowledge the plurality of people who voted Tuesday have faith in his ability to lead the country.



As Obama said during his Lima visit, and virtually every campaign stop, ďYou know where I stand, and you know what I believe.Ē



Three things stood out during his first term: He was the president when America tracked down Osama bin Laden; he was the chief executive who saved the auto industry; and he passed a national health-care plan.



All were bold moves. But the battles fought by presidents are the fights that never end.



His second term will test all of his ambitions as he stares down the countryís largest, most pressing domestic problem: the fiscal cliff. It comes four years after the onset of the recession with the United States recovery weak at best. Europe isnít recovering at all, and prospects in the rest of the world are far from thrilling. Itís an outlook that makes curbing public debt hazardous, yet governments everywhere are deciding that the job canít wait.



The U.S. fiscal cliff goes into effect in January and includes $7 trillion worth of tax increases and spending cuts over a decade. Among the policies at issue are reductions in both defense and non-defense spending, the expiration of the Bush tax cuts, the end of a payroll tax holiday and extended unemployment benefits, and the onset of reimbursement cuts to Medicare doctors.



Lawmakers must choose whether to leave in place some or all of them, replace them, postpone them or cancel them entirely. The decision will affect the economy, the countryís credit rating and the U.S. debt burden.



Last week Obama told editors of the Des Moines Register that he believes he can produce the grand bargain with congressional Republicans on a plan to deal with the federal deficit. The bargain would include $1 in new revenue for every $2.50 in spending cuts.



If left in place, the fiscal cliff would lead to the biggest single-year drop in the annual deficit as a percent of the economy since 1969. But because it would be so abrupt and arbitrary, the fear is that it could throw the United States back into a recession next year, when more than $500 billion will be taken out of the economy.



If Obama could pull off his plan, it would cement his legacy as the 44th president of the United States, and as this nationís first African-American chief executive.





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