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Fiscal cliff explained: The Big Lebowski
There was a period of high tension in the US recently as the White House and Congress rushed to pass a bill to avert the country crumbling down the side of the so-called fiscal cliff.
If you're new to this term, it was coined to describe the situation the US government would have faced - the sharp decline in the budget deficit - due to increased taxes and reduced spending if the terms of the Budget Control Act 2011 went ahead.
However, sweat was wiped from many brows with the passing of a last-minute deal that averted the crisis.
Some of the main points of the deal, delivering US$64bn in tax breaks include:
- Social security payroll tax will increase from 4% to 6.2%
- CGT: Individuals earning more than US$400,000 per year - or families making more than US$450,000 - will be subject to a 5% increase from 15% to 20%
- Income tax: Individuals who make up to US$400,000 a year - or families making upt to $450,000 - won't be touched, however those who earn more will see tax rates increase from 35% to almost 40%
- Tax break extensions: Lower income and middle-class families were granted five year extensions on tax breaks
- The debt ceiling has not been extended
- Congress salaries: The pay freeze has been reinstated by Obama, so US politicians won't be seeing a rise in their pay packet this year
- Unemployment benefits: These have been extended for another year
- Medicare providers won't see a serious cut in pay
While searching for the right terms to explain the deal further, we found a great analogy that will be of interest to all you White Russian drinking dudes out there. Flagged by our US sister website Going Concern, the New York Magazine explained the Fiscal Cliff through the medium of popular film The Big Lebowski.
According to the analogy, which was written before a deal was accepted, the nihilists are compared to the Republican party, Lebowski is Obama and Walter is Democrat senator Harry Reid.
In the film Walter figures out that there has been no hostage taken by the nihilists - which, the magazine said, relates to the Republicans being "terrified of the no-deal scenario".
"Policy-wise, the alternative to a small tax hike that they agreed to was a huge tax hike that they didn’t agree to," it read.
"The politics were even worse: Republicans would be blamed for higher taxes on the middle class in order to defend the rich, deepening an already severe image problem."
"Without a hostage there is no ransom. That's what a ransom is. Those are the...rules!" Walter explains in the film and hopes to hand the nihilists (Republicans) a small payment.
Obama (Lebowski) fears the nihilism of the Republicans, the analogy went on, a completely fanatical political party.
The president traded away a quarter of the revenue (US$200bn) he would have received in the no-deal scenario in return for temporary tax extensions and extending unemployment benefits, according to the magazine.
Apparently, this can be related to Jeffrey's offer of giving the nihilists the four bucks from his wallet.
Many expletives sprang forth from the mouths of the nihilists at this, which can be related to the Republicans making impossible deal demands.
The Republicans started bargaining for a "better" deal, with the debt ceiling being compared to the "real hostage" as in the film.
"Failing to lift it would have immediate effects," the analogy continued. "Obama's political club against the Republicans is far weaker."
However, a deal was negotiated, with Republican leaders (or, if you like, the nihilists) compromising in the end on a deal that divides the opinion of Americans.
Unlike the Big Lebowski though, there will definitely be a sequel. The US's battle with their massive debt ceiling in the coming months will see viewers - I mean, voters - tune in for another round of nihilists vs Lebowski.