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Is Going Over the 'Fiscal Cliff' Necessarily the Worst Outcome?

Is Going Over the 'Fiscal Cliff' Necessarily the Worst Outcome?

At the end of 2012, the United States is scheduled to go over the "fiscal cliff," a combination of tax increases and spending cuts that could bring the country's tepid economic growth to a grinding halt. The Bush tax cuts, which were originally scheduled to expire at the end of 2010, are again scheduled to run out at the end of this year. President Barack Obama's 2 percent payroll tax deduction as well as the extension of long-term unemployment benefits are also set to expire. These events, as well as the fact that around 26 million households will again be subject to the Alternative Minimum Tax, could mean that households may be paying up to $3,000 more in taxes each year.

In addition to this higher tax burden, government spending will be automatically reduced on January 1 as a result of the agreement forged in 2011 by Obama and Congressional Republicans to avoid the debt ceiling. Called sequestration, this will affect all areas of the federal budget from the defense department to entitlement programs.

If Obama and Congress don't come to an agreement to prevent the fiscal cliff from taking place and all of these items are fully implemented, economists say they could cost the U.S. economy $800 billion. This could potentially send the country back into a recession. Yet those worried about bloated government spending say going over the cliff would help deal with the U.S. budget once and for all. They argue that the approach of the automatic spending reductions could finally allow the country to take the continually postponed steps towards reducing the deficit.

Progressives say that the cliff is misnamed and that it is actually more of a gradual slope, so going past the January 1 deadline would not truly be the end of the world. It would also raise taxes without Republicans having to vote to increase them.

Is going over the "fiscal cliff" necessarily the worst outcome? Here is the Debate Club's take:


The Arguments

#1
421 Pts
House GOP Should Make a Debt Ceiling Deal on Fiscal Cliff

No – House GOP Should Make a Debt Ceiling Deal on Fiscal Cliff

Ford O'Connell Republican Strategist, Conservative Activist, and Political Analyst

#3
55 Pts
Expiring Tax Relief Would Hammer Middle Class

Yes – Expiring Tax Relief Would Hammer Middle Class

Pete Sepp Executive Vice President of the National Taxpayers Union

#4
-40 Pts
Going Off the Fiscal Cliff Is Good Policy­—If You Like Unemployment

Yes – Going Off the Fiscal Cliff Is Good Policy­—If You Like Unemployment

Bill Frenzel Guest Scholar in Economic Studies at the Brookings Institution

#5
-43 Pts
The Fiscal Cliff Is an Exaggerated Crisis

No – The Fiscal Cliff Is an Exaggerated Crisis

Alan Barber Domestic Communications Director of the Center for Economic and Policy Research

#6
-46 Pts
The Risks of the Fiscal Cliff Are Uncertain But Real

Yes – The Risks of the Fiscal Cliff Are Uncertain But Real

James Capretta Fellow at the Ethics and Public Policy Center

#7
-60 Pts
Better Billionaires Go Over the Fiscal Cliff Than Senior Citizens

No – Better Billionaires Go Over the Fiscal Cliff Than Senior Citizens

Brad Bannon President of Bannon Communications Research

#8
-94 Pts
There Are Worse Things Than Going Over the Fiscal Cliff

No – There Are Worse Things Than Going Over the Fiscal Cliff

Patrick Sharma Explainer-in-Chief at Newsbound.com

#9
-95 Pts
Going Over the Fiscal Cliff Is Bad Policy—and Bad Politics Too

Yes – Going Over the Fiscal Cliff Is Bad Policy—and Bad Politics Too

Michael Lind Cofounder of the New America Foundation


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