What’s up with America? We’ll try and make some sense of it for you.
In short, most countries have a limit to which their government is able to borrow without permission from the parliament. When the limit is reached it needs to be increased by the parliament or the government needs to reduce its spending. This is essentially where the USA is at at the moment.
The main focus at the moment is on President Obama’s health care plan which appears to be somewhat similar to our Medicare system. It seems the President is refusing to negotiate in relation to this plan while the Republicans want it delayed for 12 months to get the budget under better control but have passed parts of it.
As part of his plan, the President has introduced a 3.8% capital gains tax. This style of tax is old hat to us but foreign to the USA. 3.8% might sound low but remember, over there they lodge tax returns in each state they earn income plus a federal return.
We reached our debt limit a number of times during the previous Federal Government but the limit was increased with the support of the Greens and independents. In the US they are in a position whereby the Democrats have control in 1 house of parliament and the Republicans have control in the other.
Who knows what is going to happen but it seems that both sides need to start negotiating and giving some ground.