Today I woke up to two L.A. Times op-eds about the Fiscal Nonsense, er, Bluff, or Crossroads, Mole Hill, Bunny Slope, whatever… One was Doyle McManus’s Your guide to the ‘fiscal cliff’ in which he offers up three things we need to know:
First, he writes, “It’s not really a cliff; it’s merely a steep, scary slope.” How steep and scary is debatable, as you’ll see from the second op-ed excerpt. McManus does share a few key points worth noting if Congress fails to act:
The impact would be equivalent to subtracting about 4% of gross domestic product, enough to push the economy into recession.
But that’s not going to happen — at least, not abruptly. The tax increases scheduled for the first of the year can be delayed either by a stopgap act of Congress or by a stroke of Timothy F. Geithner‘s pen. (The Treasury secretary can simply postpone any change in tax withholding until a deal is made.) Spending cuts can be slowed down as well. So if Congress fails to make a deal by Christmas, that doesn’t mean the economy automatically tips into a recession.
Second fact: The Democrats have the upper hand.
Third fact: It may not be apparent, but progress is being made.
And by progress, he means Republicans aren’t doing what they did during debt ceiling talks when they walked off and accused President Obama of having cooties. For more of McManus’s analysis, go here.
The second op-ed, written by Jack Shakely, president emeritus of the California Community Foundation, was my favorite of the two. Here’s how it was headlined:
“‘Fiscal cliff’? Let’s take the plunge. The U.S. deficit and debt will fall, Social Security and Medicare will go on unharmed, and we’ll go back to tax rates that worked better than the current ones.”
That’s the short version. Here are a few details:
This reduction in the deficit would happen so fast, the CBO writes, that the gross domestic product could slow in the first six months of 2013 to 0.5% — probably causing a recession — before catching its breath in the second half of the year and starting to return to a respectable 2.4% growth. [...]
Let’s join hands and walk to the bottom of the cliff together. It’s not very far down. The deficit and national debt will be reduced; Social Security, Medicaid and, for the most part, Medicare will go on unharmed; America will go back to tax rates that worked better than the cuts we’ve been living with; and Congress will actually be forced to do something for a change: Republicans and Democrats will have to work together to repair those programs damaged by sequestration, rather than filibuster or chant talking points to make their way around the hard decisions.
Perhaps America is on the brink of a fiscal opportunity.
Glass half full, which, sadly, is a novel outlook these days.