Is Going Over the 'Fiscal Cliff' Necessarily the Worst Outcome? >
Going Over the Fiscal Cliff Is Bad Policy—and Bad Politics Too
The country can't afford major fiscal reform right now
November 16, 2012
About Michael Lind:
Michael Lind is cofounder of the New America Foundation and policy director of its Economic Growth Program. His latest book is Land of Promise: An Economic History of the United States.
Even though the so-called "fiscal cliff" is really a fiscal slope, going over it could still produce significant harm to an already weak economy, and should be avoided.
Many Democrats think they can win the political game, by letting the Bush tax cuts expire this year, and then pressuring the Republicans to join them in voting early next year for the reinstatement of the Bush tax rates except for those brackets above $200,000 ($250,000 for joint filers).
But this may be bad politics, overestimating the willingness of the embittered and radicalized Republican right to compromise in order to avoid holding middle class tax cuts hostage to low tax rates on the rich.
[See a collection of political cartoons on the fiscal cliff.]
And even if it is good politics, it is bad policy. While going off the cliff would not lead to immediate disaster, it would produce plenty of harmful effects—the abrupt end of the payroll tax cut for American wage earners, cuts in unemployment benefits, and budget uncertainty for private businesses and public agencies alike.
A "grand bargain" that attempts to combine major long-term tax reform with long-term entitlement reform is not necessary. What is needed instead is a "mini-deal" that defuses various ticking time bombs for the next few months. Only when job creation and growth are stronger should we take up major fiscal reforms. In this situation, kicking the can further down the road is the most responsible option.
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- Other Arguments
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No — Republicans must offer a deal to avoid just part of the cliff
FORD O'CONNELL, Republican Strategist, Conservative Activist, and Political Analyst
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No — We should worry about Obama's class warfare, not the fiscal cliff
DANIEL MITCHELL, Fellow at the Cato Institute
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Yes — We can manage sequester, but tax hikes will cripple the middle class and small businesses
PETE SEPP, Executive Vice President of the National Taxpayers Union
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Yes — Going off the cliff would make our current economic pain seem pleasant
BILL FRENZEL, Guest Scholar in Economic Studies at the Brookings Institution
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No — The economy will not just immediately drop into recession on January 1
ALAN BARBER, Domestic Communications Director of the Center for Economic and Policy Research
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Yes — Congress and the administration must find a way to avoid the fiscal cliff
JAMES CAPRETTA, Fellow at the Ethics and Public Policy Center
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#768128
No — Billionaires can stand the pain of tax increases, but seniors can't
BRAD BANNON, President of Bannon Communications Research
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No — Going off the cliff would finally let the Bush tax cuts expire for the wealthiest Americans
PATRICK SHARMA, Explainer-in-Chief at Newsbound.com
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