Earlier this week, about a third of the Senate met to open a bipartisan discussion about comprehensive fiscal reform and the impending fiscal cliff according to coverage from both the National Journal (subscription required), Politico, and Bloomberg. The briefing, according to "Gang of Six" cofounder Sen. Saxby Chambliss (R-GA), was intended to educate the senators on the fiscal cliff, the consequences of inaction, and the need for a comprehensive solution.
Attendees discussed efforts to develop a bipartisan solution based on the Simpson-Bowles framework. Also adding to the discussion were World Bank President Robert Zoellick and New York Federal Reserve Bank President William Dudley, who briefed the senators on the European crisis. The European debt crisis combined with the looming fiscal cliff have created a great deal of uncertainty. Sen. Dick Durbin (D-Ill.) believes that timely action would be the best approach for the economy:
"There's a genuine concern that a downturn in Europe or another place will force our hand: It's far better for us to start working on this earlier rather than later, and there's a lot of work to be done. If we can present something immediately after the election that is a good solid starting point, I think it's going to restore confidence in the business community."
The stakes of the fiscal cliff are well known, but policymakers must be determined to make the tough decisions if we are to avoid the unpleasant affects of the fiscal cliff and the economic consequences from continuing to pile on more and more debt. Sen. Ben Nelson (D-NE) describes the situation well: “Talk is important, but it has to be more than just talk.”
We applaud the Senate’s meeting and hope that lawmakers continue to discuss fiscal responsibility. CRFB encourages all other policymakers -- in the House, Senate, and White House -- to join in their efforts. Only with real leadership will a debt deal get done, and the benefits could be significant. As Sen. Mark Warner (D-VA) sees it, there is danger but also opportunity from the fiscal cliff: “If we don’t do our job, [there will be] really dire consequences. But if we can reach a really comprehensive deal, the positive impact it would have on not only our economy would be remarkable.”