Not long after her appeal to national leaders to work towards a bipartisan compromise, CRFB president Maya MacGuineas dispels 5 common misconceptions about the looming fiscal cliff in a Washington Post op-ed published last Friday. MacGuineas identifies the myths as follows:
- The fiscal cliff is mainly about defense cuts and the expiration of the Bush tax cuts.
- It’s okay to punt on the fiscal cliff for another year.
- Going over the fiscal cliff wouldn’t immediately damage the economy.
- Going over the fiscal cliff will make it easier to get a “grand bargain” on debt reduction.
- Going over the fiscal cliff would be the worst possible outcome.
MacGuineas makes the very salient point that given the tenuous state of fiscal policy, we are left with one solution: reaching a debt deal. It would be much wiser to reach a bipartisan compromise that gradually reduces the deficit, rather than choosing to do it all at once or not at all. In her own words:
There’s no doubt that going over the cliff would impose serious economic costs. But even worse would be blundering along on our current path without change. Our national debt threatens much larger economic consequences than those posed by the fiscal cliff. Down the road, rising debt could substantially hold back economic growth and send the country into a fiscal crisis that would be far worse than even a double-dip recession.
Among all the myths about the fiscal cliff, there is a certain truth. We will have to make changes to our fiscal course — either on our own terms or when the markets force us to. We should choose the first path.
We remain optimistic that the Obama Administration and Congress will make a debt deal a reality, as many Americans hope.
The full op-ed can be found here.
"My Views" are works published by members of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.