This has a link to a video of an interview with Paul Krugman on economic issues and politics. It covers topics like China, the fiscal cliff, the evolution of the GOP, and what Obama should do. Its well worth watching.
China and India are on a path to becoming the largest economies in the world. Its really pretty simple. They have huge populations and they have access to the same technology as everyone else. Economic growth is a function of population and technology. The US and Europe have been able to mold the global economy in their interests. China will become part of the big three. The only real issue is that we have limited natural resources and growth in Asia will increase competition for natural resources and global warming will occur faster than it its now.
Negotiations around the fiscal cliff and the debt ceiling are limited by the inability of the GOP to come to grips with the lost election. They are in much weaker position than they are ready to accept. Obama can let the Bush tax cuts expire and then he can propose raising taxes for the middle class. The GOP has no defense for that strategy. So far the GOP has been waiting for Obama to propose spending cuts. They have no real plan for cutting spending. Their Tea Party base is as dependent upon Medicare and Medicaid as the Democratic base. It consists of older whites. The GOP has only made weak proposals for changes to popular programs. The most immediate problems faced by the economy are not even on the table as part of the fiscal cliff negotiations.
Somehow the US has to increase revenues and cut the cost of healthcare. Eventually, we will have to move to a single payer system to deal with medical costs and we have to be able to say no to healthcare providers who over medicate and provide more services than we need to be healthy. The GOP base consists of plutocrats and preachers. The plutocrats don't want to ruin the economy and there aren't enough white social issue voters to allow the GOP to win future general elections. They do better in mid-term elections when democrats and plutocrats don't vote.