AFTER rigorous and diligent negotiations the fiscal cliff and debt ceiling issue has come to an end, paving the way for new challenges for Obama shifting his focus from so-called cliff to fiscal deficit.

The US House passed a bill undoing income increases for more than 99% of households. Without meaningful reform of entitlements, real spending controls, and a fairer, cleaner tax code, the US debt will continue to grow, and the economy will continue to stumble, said Obama.

Obama emphasised that the deficit needs to be reduced in a way that is balanced ensuring that top earners and corporations to pay even more and that Congress must raise the debt ceiling. "Everyone pays their fair share. Everyone does their part," he said.  

The largest economic impact of the budget accord will come from ending a two-percentage point payroll tax cut, a move that will shrink paychecks for US workers immediately even as most income tax cuts that expired December 31 are being extended permanently.