US share market reacts well to US tax-cut extension; Experts predict much-needed US deficit cuts won't happen; Clinton warns North Korea to stop "provocative behaviour"; China-US relations "frozen", say analysts; New Iran talks planned; Julian Assange arrested on rape charge; and more
TOP OF THE AGENDA: Obama Strikes Tax Deal with GOP
U.S. stock futures rose sharply, together with oil, gold, and other commodities as investors reacted positively (WSJ) to a deal to temporarily extend tax cuts to all Americans. President Obama and congressional Republicans agreed to a deal that would extend for two years all the Bush-era income tax breaks set to expire on December 31, continue unemployment benefits for an additional thirteen months, and cut payroll taxes for workers to encourage employers to start hiring.
Obama's willingness to extend all of the George W. Bush-era tax cuts (WashPost) is part of what White House officials say is a deliberate strategy to demonstrate his ability to compromise with Republicans. The president faces strong opposition from Democrats upset over the deal (NPR). Democrats wanted to keep lower rates for middle income earners, while letting cuts expire for households with incomes of more than $250,000.
The president presented the deal (NYT) as "an essential step on the road to recovery. It will stop middle class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs."
Analysis:
GOP election gains make it less likely Congress will enact needed deficit cuts and more fiscal stimulus, and the Fed's quantitative easing plan could create new bubbles, says CFR Distinguished Visiting Fellow Peter Orszag.
The presidential commission on reducing the U.S. deficit fell short of the votes needed to advance to Congress, but analysts said it indicated some bipartisan backing for crucial cuts that would address the country's threatening debt picture.
Six scholars from the Brookings Institution weigh the deficit reduction proposals.
Background:
Read the final version of the White House's National Commission on Fiscal Responsibility and Reform, co-chaired by Erskine Bowles and Republican Alan Simpson.
PACIFIC RIM: Clinton Warns N. Korea on Future Talks
After a meeting with South Korean and Japanese officials in Washington, Secretary of State Hillary Clinton reiterated U.S. demands for North Korea to cease its "provocative behavior" (BBC) as a pre-condition for the resumption of talks on Pyongyang's nuclear program, which were halted in April 2009. Her comments can be found here.
China: Chinese and American officials and analysts say that relations between Washington and Beijing have plunged into a freeze (NYT), as epitomized by the fact that it took the White House thirteen days to persuade Beijing to discuss North Korea. They say this year has witnessed the longest period of tension between the two capitals in a decade.
On CFR's Asia Unbound blog, Evan Feigenbaum writes: "The U.S. continues to bet that Chinese leverage will set limits on escalation by Pyongyang and restrain further provocations. But China has shown scant appetite for coercing North Korea, and that seems unlikely to change in a fundamental way."
ELSEWHERE:
- New Iran Talks Scheduled
- WikiLeaks' Assange Arrested
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org