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World cannot afford second Fiscal Cliff after Europe’s failed attempt

The Taxpayer Protection Pledge signed before witnesses by 238 US congressmen does not leave much wiggle room as the fiscal cliff arrives.It is a solemn oath to the American people -- under pain of political perjury -- crafted by my old friend Grover Norquist to block retreat.
Each member of the covenant vows to “oppose any and all efforts to increase the marginal income tax rate for individuals and business; and two, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates”.
Mr Norquist can legitimately argue that the US elections have reinforced the mandate of those demanding radical action to shrink the Leviathan state. The Republicans held the House -- the paramount budgetary institution -- by a fat majority on a crystal clear message. The party will now hold 30 governorships, the highest in twelve years.
You can see why they might feel justified in digging in their heels, if necessary letting the nation go over the fiscal cliff at the end of the year. Taxes would go up, but not with their fingerprints on the legislation. The White House could be blamed.
The story is by now well-known. Unless there is a deal in Congress by the end of the year, the Bush-era tax cuts and the payroll cuts will reverse automatically; extended jobless benefits for the long-term unemployed will be cut off; defence spending will be cut; so on. Everybody’s sacred cow is sacrificed. The combined austerity would be around $700bn over 2013, or 4.5pc of GDP.