There is a new kind of economic disorder in the United States taking roots in their fiscal policy. It has emerged in the system foreshadowing an economic apocalypse of the US economy, and is known as the Fiscal Cliff.

The implication of the Fiscal Cliff, if left unchecked, will be devastating in nature and highly toxic for the US and global economic stability. The term ‘Fiscal Cliff’ refers to a package of tax increases and spending cuts that may take place due to the expiration of certain laws dealing with tax code and state spending.

In other words, it refers to a stage where economic fortunes may slip down under a deep no-growth trajectory because of laws which will get activated automatically in January.

According to the BBC, on 31 December, a raft of temporary tax cuts is due to expire just as huge automatic spending cuts are introduced. Individuals and companies will be hit simultaneously with tax rises and reductions in government contracts, benefits and support.

BBC further says that some $607 billion of cuts and tax rises are planned, including reductions in the defense budget, the end of an employee tax holiday, changes to Medicare allowances and higher personal taxes.

The ideology of both Republicans and Democrats is asymmetrical when it comes to resolution of the fiscal mess: President Obama proposes a tax increase for the households that earn more than $250,000 per year, but Republicans tend to repeatedly torpedo that proposal. Republicans seem to favor a “no tax rate increase policy,” with some adjustments and corrections in spending programs.

According to Boston.com, Republican Senator Lindsay Graham of South Carolina said “No republican will vote for higher tax rates… We will generate revenue from eliminating deductions and loopholes, but we will insist our Democratic friends reform entitlements – something we’ve never done, and that’s where the big money is at.”

According to CBS News, about $1.2 trillion in federal spending cuts are scheduled to take place next year, and some state-run health care programs for the elderly, such as Medicare, will be affected by a 2 percent reduction in payments.

There come questions about how to jump-start job creation and fuel economic growth while still slashing away at federal deficits. Tax hikes to annihilate deficits may plunder the economy itself; tax increase arrests spending and investment but can positively correlate with a deficit reduction scheme.

Ironically, it all depends on how much importance we attach to ballooning deficits and interest service and how we see growth. If spending is slashed through different programs, like Medicare, it will adversely affect savings among the elderly as it will wipe-out state help, leaving them to rely on whatever means they have.

On the other hand, even if Bush-Era Tax Cuts were to be extended for the next two years, will they be helpful in opening the door for faster economic growth? For the last few years Bush-era tax cuts were in place in the economy along with the low interest rate policy adopted by the US Federal Reserve, but the economy is still coughing. What is needed is to increase taxes if deficit reduction is primary for the economy.

The argument is that it might drag the economy back into a recession, but again a question arises. Are these tax-cuts helpful in getting the economy back on a stable surface?

There is no magic wand that can drain out the federal deficits and growth rate with the same pattern of spending and bush-era tax cuts in place.

Ultimately what can be done to avert the crisis, to shield the US economy falling over the cliff? The resolution is in striking a deal that limits spending (to some extent) and increasing tax rates on households earning more than $398,350. Spending on defense should be lowered dramatically; further laws with sunset provisions must be avoided.

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Can we say that the American Dream is still alive nowadays? Or is is turning into a nightmare?

In 1931, the historian James Adams defined the term “American Dream” as the pursuit of success and freedom – an idea deeply rooted in the belief that “all men are created equal.” However, this concept was born with the discovery of America, because even in the 17th century, when the first colonies were established there, the continent was a symbol of liberty, individualism and progress.

People today have different perceptions about whether we need the American Dream or not. Some critics claim that it is the main culprit for the loss of moral sense in the Americans and for the birth of the materialistic and selfish society we live in today. But, did we really start valuing money more than people because of the American Dream?

The country of “unlimited opportunities,” as the U.S. was often called, does not exist anymore according to some economists. The world financial crisis has not missed the ‘New World,’ however: for some people, the moral problems among authorities that have sharpened in the recent years have a greater impact on the current situation. Wall Street frauds, illegal business transactions, corruption. As if the the thirst for money can never be quenched.

The constantly growing social inequality and the political system that serves those who can afford to invest enough in it are the main reasons for the decay of the American Dream.

According to Joseph Stiglitz, a professor at Columbia University, this term is already a “myth.” He assumes that the enormous economic gap between the different social classes in the American country results mainly from the fact that while the bank accounts of the rich are enlarging, for the poor it is much more difficult to make buckle and tongue meet. The classless society will never become a reality in the U.S. and nation-wide as a whole.

Stiglitz is convinced that most Americans believe that the financial and class inequality derives from the fast economic development that took place in the last years. However, he reminds everyone of the fact that after the Second World War, the economy in the U.S. started its vehement growth and advance, but the gap between the middle-class and the well-off was not as broad as it is now.

Stiglitz’s solution: the U.S. has to invest more in public education and in programs that can give chances to young, ordinary Americans to pursue a brighter future in their home country.

Meanwhile, President Barack Obama appealed to Congress for an extension of the Bush-era tax cuts for those whose annual income does not exceed $250,000, and thus he supported the government’s initiative to hold down middle-class tax rates.

According to Stiglitz, now the U.S. faces a dilemma with historical significance. “If it continues as it has in recent decades, the lack of opportunity will mean a more divided society, marked by lower growth and higher social, political and economic instability,” he commented.

A lot of specialists claim that the American nation first has to escape from the moral crisis and then to look for financial prosperity. Recently Ron Haskin, a former White House adviser on welfare issues and now director of the Brookings Center on Children and Families and the Budgeting for National Priorities Project, expressed his idea that the young generation in the U.S. should follow three main steps in order to emerge from the poverty.

According to him, high-level education, full time work and marriage after attaining at least the age of 21 are the keys to the normal middle-class life in the North American country. Hoskins is prone to believe in the individual initiative and desire rather than in the improvement of the political system.

The American Dream means a pursuit of happiness, opportunity and freedom.  This concept will never be buried because sometimes it is enough for people only to believe in its existence in order to continue living.

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