US debt commission divided on austerity plan, struggles for consensus (+ analysis); Portugal PM says 'we do not need help'; Iran talks raise hopes, but will demand stiff terms; Chinese manufacturing growth eases jitters about Europe; and more
Top of the Agenda: US Debt Commission Postpones Action
A presidential commission tasked with cutting the US budget deficit postponed action on a fiscal austerity plan (Reuters) after it failed to garner enough support among commission members, echoing the country's deep divisions on reining in government debt. The eighteen-member panel put off a final vote until Friday (FT) to build consensus, though they are expected to unveil the plan today. The plan is expected to be roughly the same size as their original proposal released last month, which contained a mix of spending cuts and tax increases worth about $3,800 billion by 2020. Panel co-chair Erskine Bowles--who needs to secure fourteen panel votes to trigger a congressional vote on the plan--promised at a press conference the final plan would not be "some watered–down version."
Labor groups and advocates for the elderly shuddered at the draft plan's cuts to Medicare and Social Security and increase in the retirement age. In recent days, those groups have introduced a series of competing deficit-reduction plans (WashPost) that would preserve the social safety net by targeting the military for deeper cuts and raising taxes for the wealthy. The latest, unveiled Tuesday by the Citizens' Commission on Jobs, Deficits, and America's Economic Future, argues that deficits should be reduced only after the economy has fully recovered and unemployment has dropped below 5.5 percent.
Analysis:
On RealClearMarkets, Bill Frezza says the government must "pare down the bloated military-industrial complex just as they must reign in middle class entitlements if we are to have any hope of regaining solvency."
In the Washington Post, Martin Feldstein argues for a way to cut budget deficits without raising tax rates.
In Foreign Affairs, CFR President Richard Haass and Roger Altman say if US leaders do not act to curb their debt addiction, then the global capital markets will do so for them, forcing a sharp and punitive adjustment in fiscal policy.
PACIFIC RIM: Asia Manufacturing Boosts Global Outlook
Manufacturing activity in Asia expanded in November, led by a strong acceleration in China, offsetting market jitters (Bloomberg) caused by Europe's debt crisis and tensions on the Korean peninsula.
Japan: Following the US-South Korea joint naval drills in the Yellow Sea, Japan and the United States will conduct joint exercises (WSJ) in the waters and airspace around the country next week.
ELSEWHERE:
- Clinton 'Encouraged' on Iran Talks
- US Skepticism on Afghanistan Rises
- Portugal Denies Need for Bailout
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org