So a financial disaster for the US has been averted. Automatic tax increases of US$500 billion ($604 billion) and cuts in military and domestic spending programmes of US$109 billion that were due to kick in on Tuesday have been replaced with higher taxes on the wealthy. A new year's resolution indeed.
But there will still be an increase in payroll taxes that wage earners will feel.
Households making between $40,000 and $50,000 a year will have a tax increase of $579. Households earning $50,000 and $75,000 will face an increase of about $800, according to the Tax Policy Centre.
The US President and Congress have been burning the midnight oil to prevent their country falling from the fiscal cliff. President Obama does his job for a base salary of US$400,000.
And so, the wealthy, who represent 2 per cent of Americans and are counted as those who earn at least $400,000 each or $450,000 as a couple, will face a tax rate increase from 35 per cent to 39.6 per cent. Investment income earners will also face an increase of 3.8 per cent in tax for individuals making $200,000 a year and couples making $250,000 a year.
The US is our third largest trading partner, comprising 8 per cent of our exports and these tax increases will reduce their buying power.
We've seen the effects of tax increases and cuts in spending in New Zealand. In an attempt to get back into a surplus position something has to give. Families and small business owners will be the first to have to adapt.
Small businesses provide 49 per cent of jobs in the US.
But the growing number of new businesses starting in the US because there aren't enough jobs aren't employers, but will compete on price with lower overheads, take less profit, work longer hours and involve people who have gone without a pay cheque to keep the business running.
I would like to think we would have a better 2013 than 2012. In saying that, last year was pretty average, we dumbed down our economic growth for New Zealand in December from 3.4 per cent to 2.9 per cent for the year ending March 2014.
For the people of the US, for their welfare, better a late solution than no solution, I say. In my opinion, Obama, you are earning your salary.
Unfortunately, however, in what is a global financial crisis, united we stand, united we fall.