Americans interested in understanding how the economy works need to turn off the 24-hour news networks and find better sources for their information.
The amount of misinformation and hype around the so-called “fiscal cliff” is absurd. Absolutely absurd.
There are real issues here, for sure, but Americans are not getting the news that they need about those issues.
From the Washington Post’s One in four Americans has an opinion about an imaginary debt plan:
A new poll from Public Policy Polling found that an impressive 39 percent of Americans have an opinion about the Simpson-Bowles deficit reduction plan.
Before you start celebrating the new, sweeping reach of the 2010 commission’s work, consider this: Twenty-five percent of Americans also took a stance on the Panetta-Burns plan.
What’s that? You’re not familiar with Panetta-Burns? That’s probably because its “a mythical Clinton Chief of Staff/former western Republican Senator combo†that PPP dreamed up to test how many Americans would profess to have an opinion about a policy that did not exist.
Even worse, from Business Insider’s 47% Of People Think The Deficit Would INCREASE If We Go Over The Fiscal Cliff:
So we asked simply: Were the United States to “go over the fiscal cliff,” what do you expect would happen to the National Deficit?
At least according to the CBO and most economists, the correct answer is that “It will decrease.” Going over the Fiscal Cliff would, according a Congressional Budget Office study, result in a reduction in the National Deficit of $607 billion between fiscal years 2012 and 2013.
However that was not the most popular answer. Per the survey, 47.4% of respondents said that the deficit would INCREASE if we went over the Fiscal Cliff. Only 12.6% think it will decrease.
So only 1 in 8 Americans, approximately, understand that the constellation of spending cuts and tax increases set to take effect in 2013 would reduce the deficit. Yes, we’d likely end up in a shallow recession if all those measures happen, but the additional savings and revenues would offset any decline in tax revenue from reduced economic activity.
As I’ve said here before, if you’re biggest concern is really the deficit and debt, then embracing the fiscal cliff might be a good call.
And as for the Simpson-Bowles plan that folks keep embracing, I’m betting that most don’t know the following, from Ezra Klein’s 11 shocking, true facts about Simpson-Bowles:
1) Simpson-Bowles ends the the Bush tax cuts for income over $250,000. And note that they do that before they reform the tax code. The expiration of the tax cuts is built into their baseline. That way, their reform of the tax code starts from a revenue level that includes the revenue from those upper-income Bush tax cuts.
2) There are a lot of tax increases in Simpson-Bowles. $2.6 trillion over 10 years, to be exact. That’s more than President Obama ever proposed. It’s way more than the Republicans have ever proposed. It’s $1.8 trillion more than in the “Bowles plan†that Boehner is proposing. Think about that: To follow the Simpson-Bowles recommendation on taxes, you’d have to take the $800 billion Boehner is proposing and then raise taxes by more than the $1.6 trillion Obama is asking for.
3) There are so many tax increases that the plan is nearly 1:1. According to CBPP’s calculations, Simpson-Bowles includes $2.9 trillion in spending cuts and $2.6 trillion in tax increases. That’s 1.1:1. If you add the $800 billion in projected interest savings to the spending side, then it’s 1.4:1.
And that’s just three of 11 points in Klein’s post.
I’ve heard rants against everybody from President Obama to Rep. Paul Ryan about their failures to embrace Simpson-Bowles, but why would they have? Many items in it are political nonstarters; embracing those positions before the election could have been political suicide.
Last March, a plan very similar to Simpson-Bowles was defeated 382-38 in the House.
We are a country of vast wealth and resources. We are entirely capable of addressing our problems with the deficit and debt.
But if we address them too quickly, we run the risk of cutting off growth in the midst of a sluggish recovery.