Not With A Bang But A Whimper.

My Apologies to TS Eliot.

The US passed their Bill to raise the Debt Ceiling today - just under the midnight wire.

As we all knew they would.

But the All Party Agreement really amounts to little over the status quo - no tax hikes and no substantive spending cuts.

So what exactly was achieved?

A few things in fact.

First, it delayed - at least for the moment - the collapse in confidence of the American System - which would have reverberated negatively around the world.

Second, it has refocused the debate from reckless spending - aka Bush and Obama, to an agreement - even grudgingly on the part of the Dems - that serious spending cuts will have to be taken in due course.

Third, with this agreement, the Tea Partyers have dodged a bullet. Had they forced a Government Default they would have taken the Lion's Share of the Blame for the Fall Out mentioned in my First Point. This could easily have carried over to next year's Presidential Election and caused the defeat of the Republicans.

Fourth, it keeps Obama politically alive for the time-being. He was forced to distance himself from his Left Wing which in turn endeared himself to the Centre where he needs to be to effect a second win.

So all in all much was gained from so little.

But make no mistake, the Tea Party and the Republican Party are right to make Debt Reduction an issue. The States can no longer afford to spend today with tomorrow's money. In that regard it is imperative they win in November 2012.

With their President in place and with control of Congress they can in an orderly and systematic fashion bring Big Government to Heal.

Obama and company too are correct in their pursuit of more Taxes. As I have said in an earlier Blog - the US is in such bad shape that reductions alone cannot address their insolvency. Taxes must go hand in hand with reductions and one of the best taxes to levy would be a Value Added Tax like we in Canada and most of Europe possess.

So in with a Whimper but realize the American has been changed dramatically.

As I see it...

'K.D. Galagher'