With the 'fiscal cliff' of budget cuts and tax rises approaching in January 2013, the two candidates in the 2012 US presidential election take opposing positions on the proper path for reducing the US budget deficit and federal debt.
President Barack Obama would hold federal government spending at about 22% of GDP, while Republican challenger Mitt Romney has said he would decrease it to less than 20%. At the same time, Obama has promised to raise taxes on those making more than $250,000 a year, back to the rates they paid during the Clinton administration, while Romney has vowed to lower those rates.
Barack Obama would cut American defence spending; Mitt Romney would raise it.
Both Obama and Romney say they would complete the Trans-Pacific Partnership (TPP) trade agreement. While Romney has clearly stated he would negotiate a free trade deal with Europe, Obama is still considering this.
Any slowing or acceleration of the US economy, in the short and long term, in response to the next administration's budget, tax and trade policies, will ripple through the world economy.
This paper is part of the US Election Note series. Other Notes focus on: The Military vs Development Aid, Trade Policy, and China Policy after 2012.