Between the election and the end of the year, President Obama and Congress will face some daunting work.
It’s widely considered that the so-called “fiscal cliff” could dramatically slow the already-weak American economy. The Bush tax cuts expire at year’s end, as do the temporary payroll tax cuts that the Obama administration pushed.
And there are mandated cuts in government spending, primarily to defense. Congress and the White House agreed to that primarily as a way to force a broader budget deal.
There seems little doubt that the economy will take a blow if all this happens (see this post), but something really good would happen too: the deficit would immediately start declining.
Going over the fiscal cliff would cut the deficit by $720 billion in the first year.
And that’s one reason that some think we should simply do nothing. But some are arguing for the fiscal cliff because we would reset the budget debate. With so many members of Congress taking a hard line on tax increases, there’s little way to increase revenues — and without more revenue there’s little chance of ever balancing the federal budget.
From The Washington Post
That’s the gist of the WashPo Wonkblog piece by Suzy Khimm today: Meet the fiscal cliff-divers, who think jumping off could be our best bet.
From that post:
The very notion of a “fiscal cliff†suggests that the country is approaching a calamitous drop-off at the end of the year — and it would be tantamount to suicide to jump off.
Colombian cliff diver Orlando Duque launches off a 78-foot rock peninsula in La Rochelle, France. (Dean Treml/AFP-Getty Images)
But a contingent of policy wonks and Democrats insist that letting the Dec. 31 deadline come and go — thus triggering automatic tax increases and spending cuts — could produce the best outcome for the country. Once the tax hikes have kicked in, the reasoning goes, Republicans would be hard-pressed to roll them all back and would have to accept a deal on taming the deficit that contains more new tax revenue than GOP lawmakers want.