"As the summer of 2012 draws to a close," says Kathleen Pender at The San Francisco Chronicle, "let's take a look at some of its greatest hits: There was 'Call Me Maybe' (incessant pop song), The Avengers (box office winner), and the "fiscal cliff' (reality show in which Congress plays chicken with the economy)." The fiscal cliff refers to hundreds of billions of dollars in tax increases and spending cuts that are scheduled to automatically take effect on January 1, 2013 — unless a divided Congress intervenes. The Congressional Budget Office (CBO) says going off the fiscal cliff would plunge the U.S. into a recession and drive up the unemployment rate — which would seem like a disaster that should obviously be avoided at all costs. Still, a fiscal-cliff-averting agreement seems elusive, as Republicans insist on no tax increases, while President Obama favors letting Bush-era tax cuts expire for the wealthiest Americans, while extending them for everyone else. But maybe, argues James Kwak at The Atlantic, the U.S. economy could actually benefit if Congress allowed the economy to tumble off the fiscal cliff, as doing so would help shrink our long-term debt. Should the U.S. embrace the plunge?
Yes. It would help the economy in the long run: "If we let the tax cuts expire," says Kwak, "things will get worse in the short term." But the CBO also projects that "we can bring the national debt under control in the medium term, simply by doing nothing, without hurting the long-term prospects for the economy." If America goes off the fiscal cliff, we'd reduce the deficit to 0.9 percent of GDP by 2022 (from 5.5 percent), and shrink the national debt forecast by a whopping $8 trillion. The "answer to our deficit problems" is "staring us in the face."
"The case for jumping off the fiscal cliff (even if we fall into recession)"
No. Millions of Americans would get hit: "The mother of all tax storms is heading our way," says Gregory Bresiger at The New York Post. "And it's due to arrive at the end of the year, raising rates for more than 100 million Americans." The fiscal cliff would cause two million job losses, and hit the pocketbooks of middle- and lower-income Americans. Congress has to get its act together.
"Goin' off a cliff"
We need to reduce debt — but not this way: Falling off the cliff would surely provide "long-term gain for short-term pain," says Roberton Williams at The Christian Science Monitor. And we have to do something. It would be disastrous if, say, Congress agreed to "extend all of the expiring tax cuts and postpone the scheduled spending cuts for the next 10 years." But there must be a middle ground. Ideally, Congress will take modest steps to raise taxes and cut spending, and "segue from not squelching our nascent economic recovery in the short run to accepting the fiscal discipline required to control deficits and bring down our national debt."
"Fiscal cliff vs. tax-cut extension is gloom or doom. Is there another way?"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Who are the real gay marriage bigots?
- What the collapse of the Ming Dynasty can tell us about American decline
- What would a U.S.-Russia war look like?
- Don't worry: World War III will almost certainly never happen
- Religious liberty should be a liberal value, too
- 22 TV shows to watch in 2014
- Why is American internet so slow?
- Watch The Daily Show mock Fox News' confused man-crush on Vladimir Putin
- Russia's Ukraine invasion is a moral crisis
- The Daily Show's Aasif Mandvi dismantles another ObamaCare myth
Subscribe to the Week