Debate Club

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

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Don't even think about it! Falling off the fiscal cliff would be an economic disaster for the United States. The fall would add over $300 billion in taxes in this fiscal year, along with another $200+ billion in spending cuts and other changes, or a net change in the deficit of over half a trillion dollars in the current fiscal year (9 months of it are left).

The Congressional Budget Office says that our GDP would be reduced by 3.4 percent in fiscal year 2013, and 4.5 percent in calendar year 2013. We are suffering now with a "slow" recovery of 2 percent growth or slightly less, with unemployment still about 7.9 percent. The cliff recession would wreck our economy and make our current national pain seem pleasant.

[See a collection of political cartoons on the fiscal cliff.]

Worse, the suffering would not gain us much. Taxes would rise on all Americans, including those least able to pay, but little would have been done to reduce the entitlements which are the long-term drivers of our deficits and debt.

According to Secretary of Defense Leon Panetta, our national security would also be imperiled. As would healthcare: Doctors' reimbursements would be cut 27 percent, and many would no longer accept Medicare and Medicaid patients. Nearly 30 million more middle class Americans would be subject to the Alternate Minimum Tax, a form of torture now reserved for more affluent taxpayers.

Also included in the fall would be a failure to extend the debt ceiling. The country would default on its debt and not be able to borrow. Hollywood might be able to dream up a more horrible "nightmare" scenario, but jumping off the cliff will be worse than most normal people can imagine.

[See a collection of political cartoons on the budget and deficit.]

There are some members of Congress who have expressed support for the "let 'er rip" concept: That is, forget the negotiations and just jump of the cliff. They see it as a good way to bring more tax revenue, and expect good policy to arise from the ashes of the fall.

Falling—or jumping—off the cliff is good policy, but only if you like recessions, enjoy unemployment, and don't mind living in the ashes. The economists who tell us the fall means a recession are not fooling. The cliff is real, and the fall will be painful. Responsible politicians will avoid it at all costs.

Bill Frenzel

About Bill Frenzel Guest Scholar in Economic Studies at the Brookings Institution

Tags
fiscal cliff
economy
Congressional Budget Office
deficit and national debt
defense spending

Other 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

#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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