It's true that federal policymakers are facing a daunting task. At the end of next month, automatic spending cuts are due to kick in, just as all Bush-era tax cuts and President Obama's payroll tax cuts, are set to expire. The Congressional Budget Office has said the combination of events may push the economy into a recession, unless a compromise solution is reached.
The situation is commonly characterized as the "fiscal cliff." There is, however, a problem with the metaphor: it's misleading and more than a little absurd. Paul Krugman had a good piece on this the other day.
It's worth pointing out that the fiscal cliff isn't really a cliff. It's not like the debt-ceiling confrontation, where terrible things might well have happened right away if the deadline had been missed. This time, nothing very bad will happen to the economy if agreement isn't reached until a few weeks or even a few months into 2013. So there's time to bargain.
Matt Yglesias made a similar point last week: "A salient fact about non-metaphorical cliffs is that falling over them is generally irreversible. If the cliff is high enough that falling off of it would kill you, then if you fall off you're going to die and that's the end of it. The 'fiscal cliff' by contrast isn't like that at all."
There'd be a little short-term pain, but President Obama would unveil a new policy early in the new year, which would push taxes lower on the middle class. So long as congressional Republicans are willing to act, much of the problem would be resolved quickly. (We're talking about days and weeks, not months.)
Also, to echo a point Suzy Khimm raised on Friday, another part of the problem with the metaphor is that much of the political debate is predicated on the notion that the "fiscal cliff" necessarily refers to a fiscal problem. That's actually backwards -- if the automatic spending cuts and automatic tax increases kick in, the nation's budget deficit would shrink a lot and in a hurry.
This is important because it should, in theory, help shape the debate. I've heard pundits arguing lately, "We need a deficit-reduction plan to avoid the fiscal cliff," but that doesn't really make sense. Going over the so-called "cliff" would mean automatic deficit reduction. The point of the bipartisan talks, then, is to find an alternative solution to the same challenge. Policymakers are effectively looking to replace an unpopular austerity plan with a more palatable one.
Ezra's looking to replace the "cliff" metaphor with something more sensible. Here's hoping something better comes along soon.
(Image: Ross-H/Flickr)
