Cliff Hanger: The US Fiscal Cliff Matt Brennan The Greatest cliff hanger of all time arguably involves

Mufasa and Scar in the Walt Disney classic, The Lion King, where after rescuing Simba and narrowly avoiding being crushed by a herd of Wildebeest himself, Mufasa is now dangling precariously at the top of a cliff with scar being his only possible salvation from death. All essential elements of a cliff hanger are present; a captivating lead up to the climax, genuine concern for Mufasas wellbeing, and the distinct possibility that the outcome could go either way. Life is imitating art, where the US as Mufasa, finds itself on the brink of a very steep fall. But first, here is a bit of necessary background on the US fiscal cliff. The US fiscal cliff is the result of the economic mentality of the US, who prefer not to cut their way out of debt, but to grow their way out of it. It would be fair to say America is experiencing a fair bit of growing pains at the moment, but US analysts deem this quite normal behaviour and refer to this phenomenon as kicking the can down the road. This is opposed to European austerity measures of completing stopping the economy, suffering the consequences and then dealing with the can. There is a well-known saying that if America sneezes the rest of the world catches a cold. Well at present the US has the H1N1 strand of bird flu, so there is genuine interest from the rest of the world in regards to Americas wellbeing. The lead up to the US Fiscal cliff has been nothing short of traumatic; with the 9/11 attacks and the GFC being the initial reasons why such aggressive tax cuts and spending packages were introduced in the first place. And fulfilling the third criteria of a cliff hanger, there is also the distinct possibility that America will allow itself to fall of the cliff. Barrack Obama must make a decision on Americas economic future by midnight 31st December and his reluctance stems from the fact that in order to avoid economic suicide, the US must continue to tread their current path of budget deficits and indeed grow their way out of this quagmire. Unlike The Lion King, the US fiscal cliff also has a love triangle involving the US, Australia and China. Australia has wedded itself to these two powerhouses of the world ever since the Howard administration decided to shift the countries decision making horizon away from the UK. Whilst this polygamy involving US-Australia-China relations in the past has been largely beneficial for all concerned, the present concerns of an American demise let alone a recession if they do indeed fall off the fiscal cliff, is stagnating all three economies. At this point, Australia could dream of starting a new life and eloping with China on the condition that China renounces its ties with the US by unpegging their currency (the Yuan) from the US Dollar, and who knows Australia could live somewhat happily ever after. More likely, Australia will remain faithful (for better or worse) to the US, knowing that the US, in some complex Dr Jekyll and Mr Hyde plot twist to The Lion King, has Barack Obama playing the role of both Scar and Mufasa, and he carries the weight of the nations destiny on his shoulders. Looking at the US fundamentals, they arent actually that bad, as the US has a strong median income, unemployment is near 44 month (from the November data) lows, there is cheap borrowing capacity and they are still the innovation centre and magnet of the world.

What is essential for making a cliff hanger interesting is the aspect of time running out. In The Lion King, it is tantamount that from the chase of the wildebeests to the noble (spoiler alert) death of Mufasa, that the scene went for around two and a half minutes instead of two and a half hours. The fact that the US Fiscal Cliff Hanger has a scheduled end time combined with Obamas reluctance to act on it, adds a whole new and unprecedented level of excitement to US Fiscal policy.