Ground feel unsteady under your feet? It might be that you’re standing at the edge of a fiscal cliff.
According to Politico, “If Congress doesn’t take action by the end of the year, a package of tax cuts adopted during George W. Bush’s administration expire while deep spending cuts kick in. If that happens, the economy would go over a ‘fiscal cliff.’” While a steep reduction in federal spending could help shrink the budget deficit, less spending also means even less stimulus to our weak and struggling economy.
Recent reports have shown Members of Congress in heated debate over the issue, but expectations are low for any resolution occurring before the November 6 elections.
As we noted in Memo to Members recently, there is another theory: it’s not a fiscal cliff, it’s a fiscal slope. According to the Center on Budget and Policy Priorities, chances are, even if a deal is not reached by the beginning of 2013, Congress is likely to work something out eventually- meaning that consumers and businesses will have enough confidence to keep spending. Democrats have shown a willingness to test that fiscal slope theory, if it means the richest 2% of Americans would pay their fair share of taxes.
Do you believe we’re at the edge of a cliff, or a slope? What action do you think Congress needs to take? Let’s talk about it in the comments.