Some commentators and journalists have pointed out the metaphor for the impending tax increases and spending cuts in 2013–the “fiscal cliff”–is highly misleading, and probably intentionally so. There is no way to reverse course when you fall off a cliff; you are plummeting towards the ground, making a terrible mess upon impact. Thus the brakes must be applied before the end of the year.
In reality, this isn’t true; Congress and the White House can actually go past the “cliff” deadline, and strike a deal early next year, without the supposedly dire consequences. The numbers thrown around in the press represent the tax/spending impacts from an entire year of living beyond the cliff. As Paul Krugman wrote (11/9/12), “the fiscal cliff isn’t really a cliff” and “nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013.”
That’s reality. But here’s the graph that takes up much of the front page of today’s edition of USA Today (11/14/12):
Subtle, right? The story that accompanies the frightening image doesn’t do much to calm fears.
And over at the Washington Post (11/14/12), Neil Irwin attempts to rebut the idea that going over the “cliff” for a short while wouldn’t that bad. “The Economy (Probably) Can’t Survive a Short Dive Into Austerity Crisis” reads the headline. Irwin writes that those who say the cliff analogy is wrong–people like Krugman and economist Dean Baker–are probably mistaken:
Some would argue that it won’t be very bad at all. That’s the answer the normal analytical tools would offer. But this is one of those situations where the normal analytical tools might be leading people astray: There is every reason to think even a short exercise in cliff-diving would hurt quite a lot.
Irwin here sounds remarkably like a pre-election pundit pontificating about Nate Silver. If there’s “every reason” to believe the “normal analytical tools” don’t apply, what are they? Irwin gives readers a quote from an economist at J.P. Morgan Chase–and then reverts to arguing that actually it probably wouldn’t be so bad:
In a narrow sense, a short voyage off the cliff shouldn’t crush the economy too badly. The CBO estimates that the full brunt of the policies add up to about $56 billion a month, which is a lot of money–about 4 percent of GDP–but should, in theory at least, do only modest damage to the economy if it lasted only a few weeks. One month of austerity along those lines would subtract only about a third of a percentage point from growth for the full year, before accounting for multiplier effects.
I’m not sure what “shouldn’t crush the economy too badly” means, but it’s not that important, since Irwin still thinks things will be bad:
But all this seems like a naïve way of viewing the situation, one divorced from the real ways that markets and psychology interact with economic forces.
So the real point–for those who aren’t naïve, apparently–is that CEOs are worried about the cliff. They talk about it a lot; some “will reconsider their own capital spending and hiring plans,” perhaps. And: “Markets don’t like risk.” To which he adds:
The economic impacts of any legislative debate are almost impossible to measure in real time. But the stock market renders its verdict every second of the trading day. If the talks are going off the rails in the final days of December, with no accord in sight, it may well be the markets, looking forward to the ill-effects to come, that provide a certain focus for recalcitrant lawmakers.
So the market could start to panic a bit, which would prod some lawmakers to make a deal before we reach the cliff.
For a piece that’s supposed to tell us why going over the cliff for a little while would be bad news, Irwin manages instead to make the counter-argument.
As usual, we see “Social Security tax cut ends” as contributing to problems with the economy. No one, NO ONE, ever says that Social Security and Medicare are funded by FICA, NOT the income tax. “Entitlements” have nothing to do with budget shortfalls. And of course the FICA tax cut was simply part of Obama’s plan to help destroy Social Security and Medicare.
I don’t believe that there’s a “fiscal cliff.” It’s more like a baby bump and USA Today is trying to give birth to “Rosemary’s Baby. ” That was a fun old movie, but really has nothing to do with reality.
So strange people in Congress, riddle me this: I have read that there is a place in Ohio that holds the I.O.U.s for all the money that has been borrowed from social security by the government for other things. Maybe you should put that money back first, before you decide on the health of this. Besides, why do you call that retirement money ” entitlements,” because it was set up to be an investment for the poor when they couldn’t work anymore. Of course, it was supposed to be part of a 3 legged stool, with company pensions and savings, but those last 2 don’t seem to exist any more, so that throws the whole argument off. Corporations , banks and Wall St. are responsible for that, so really, they need to sit down and be quiet.
I still think that since the military can’t figure out where its money is, then that is the best place to start cutting. Even the GAO has no idea where that money is. Maybe the military should attack the Cayman Islands, because that seems to be where all the money is. That is the one UNnatural resource of that place. : )
Oh, and USA Today, if things are so awful, if we are soon to fall into the abyss, then maybe the first thing people need to cut is you! Who wants to pay for sooothsayers that can only predict disaster?
The ss tax increase will keep the “defined benefit” for seniors solvent for a number of years. And spending cuts? Repeatedly avoided by everyone is the “War Department Budget” Why is that expense never discussed?????
Well lets all agree we should not go there.We need time.Time to in effect prepare for the fiscal collapse.And I mean complete collapse.No banks ,no credit cards,no fuel,massive food shortages.Collapse of the dollar.Anarchy,riots that will spread over the world.We have made a conscious decision to play in the sun a while longer with this past weeks vote.A while is all we have now.We need to rebuild family ties.Friends.Loved ones and people of similar purpose who will work together to survive.To defend themselves.Im sorry folks.but the numbers don’t lie.This is non sustainable.I screamed for two years to the high heavens what would happen when Fanny and Freddy went under.This was long before the crash and the liberal judo to cast the banks and wall street as the real culprits.People laughed.Then they cried as their 401Ks,jobs and homes went to shit.Well what is coming is going to make that and the great depression look like a summer holiday in the country.
Cats and dogs living together, flouride in the water, fire in the sky, men marrying men, women marrying women, kids speaking Spanish . . . and my very favorite–Walmart about to get unionized. Bring it on! It’s not too late for ‘cons and trolls to pack up and get the fuck out before shit starts falling from the sky. They’re coming for your guns! Run!
This is another manipulation by government and media to get ordinary citizens and working people to accept austerity measures. There is great wealth in this country. The problem is, very few people have it.
Tim remember last week I spoke of a man worth hundreds of millions who is preparing to run to Canada at the first sign of collapse.Saw this week one of our major financial groups are moving to (wait for it)….Canada!In preparation for The US falling and going bumpy on their behinds?.Seen the stock market lately?Reading about all those major companies that are promising layoffs and cuts to workers hours to pay for the coming hit their going to take?Obama said yesterday that if the Rs don’t give him everything he wants….. he will be forced to raise middle class taxes.Ha ha ha.A week goes by and his promises fold like a house of cards.You buying that ?Or is it as we have said all along his plan?But at least that summer of love in the middle east is working for him.Jesus H christ.
Nice too see that the cliff metaphor is being phased out on MSNBC.
Nice to see that the Reich wingers like Michael-e believe the crap his Plutocrat loving brethren produce for his ears. Plutocrat created fiscal disasters that give a false reason to put us under austerity and flush away the rest of the New Deal they despise so much. Then the Plutocrats will be the last ones standing with organization and are allowed to take over. “Temporarily” but that will last for a long time.
Night gaunt what hate filled rant are you on now?Riech wingers?Really?Then informing people Im for government takeovers when that is 180 degrees from everything I believe in.New deal?Gimme a break.Try yelling New deal to those New Yorkers 2 weeks ago who had no food ,water,or power.Here is the new deal sir.We are broke and the new deal is a shitty deal.I am saying things are going to get bad.Not just because of Obama,or Bush ,or frigging Abraham Lincoln.Im simply stating fact.You think im a Nazi for saying so.Again……and WE are the haters?
I like that–Reich-wingers. Speaking of plutocrats, I got a call from a $300 million dollar man last nght–Mitt Romney! He apparently found out about me and B. Obama being pals, so he called me to complain about being treated unfairly by the Dems. The irony is, I took the call on the new i Phone my pal Barack sent me. I also recieved a box of artisanal aged steaks, 30 of ’em. I was eating one of these $75.00 beauties when Mittens called–more irony. He went apeshit when I told him about these extravagant gifts, and started screaming into the phone–“You cheapjack, uneducated brute! My boys will take of you–all of you fuckin’ freeloaders! I’ll, I’ll . . . . ” At this point, he apparently collapsed, and his wife picked up the phone. “We know who you are, we know where you live,” she cooed, unperterbed by the jabbering, whimpering old man at her feet. “We’ll get you–all of you.” She hung up. I knew she was just talking, but I was a little shaken. I opened up a bottle of Merlot (coutesy of the Democratic party–just for showing up to vote) and polished off the steak. “Good riddance to bad rubbish,” I said aloud, and laughed.
You know, I hear that CEOs like getting money so I am going to send all of mine to the nearest corporation out of deference to their feelings… Wake up and listen to the Nobel-prize-winning Krugman and pay attention to the economy instead of worrying about what the “If it feels good, do it” financial/managerial are feeling. The economy works better overall when it works for the bottom because there is greatest demand. Maybe the wealthy do not get to shower in champagne, but they do well, too.
Tim and Tishado.As my Scottish grandma would of said…..What you on about?Tim very creative but what is the point?Tishado are you under some illusion that The president is not a very rich man and getting richer every day?Same with his VP?Same with his senate,house,and cabinet?Government workers in Washington live in one of thee highest rent districts in the country.Why do you act as if you and yours are not at the top of the heap when it comes to green?Hypocrites.Bloody hypocrites.And remember the reich was the national SOCIALIST movement.Other than Tim I see no socialists about.At least not on the right.
“remember the reich was the national SOCIALIST movement.”
Good grief! The Reich was famously anti Communist and anti-trade unionist. It was Fascist: nationalistic, with emphasis on ancestorial history and culture, militaristic, and racist. It also denigrated “decedent” artists, Non-christians, intellectuals, gays, immigrants, etc, etc
Thanks Paul…….And what idiots are calling the republican party that?
“Nationalistic, with emphasis on ancestral history and culture, militaristic, and racist. It also denigrates “decedent” artists, Non-christians, intellectuals, gays, immigrants, etc, etc” pretty much describes the modern Republican party.
It’s kind of hard to miss, actually.
Random Paul
Those kind of labels,canards,and idiotic broad pain strokes should be left to people far less considered ,and educated,than the people on this sight.Ran into a moron yelling on the street his political views a week ago .May i quote him now from my cell phone recorder…”.Liberals are all communists.Liars.Faggots.Sodomizing pedaphiles.God hating animals who wipe there asses with the constitution.Spend all the money in the honey jar(I like that part)….and put the rest of their tab on our kids.Socialistic scum who cheat and steal to keep their welfare, section eight, and food stamps coming in while they drink their colt malt liquor,get high and watch Tv”
Your sounding to me like the other side of his coin.It may sell elections to people who believe this nonsense.But at this point it sounds patronizing even to the dumbest among you.
Michael, You just quoted a Republican that proves my point….Thanks.
Random Paul he is not a republican.He is the village idiot.Spewing divisive vomit in every direction.Anyone who believes the nonsense you wrote…. is not a Democrat.They are just more village idiots.Slack jawed morons doing the thorazine shuffle.This type of hyperbole does not represent either side.
Seeing the anti-Random Paul comments I had to go back and see exactly what kind of vomit he was spewing. In fact, what he has said here sounds pretty reasonable to me. Doesn’t sound like a village idiot to me. And if he’s no longer a Democrat, he has reason to be proud of that.
“Socialistic scum who cheat and steal to keep their welfare, section eight, and food stamps coming in while they drink their colt malt liquor,get high and watch Tv”
This is pretty much what has been said on Republican talk radio, Republican news channels, and Republican websites every day for at least the last four years. Heck, Romney said the same thing to some of his high rolling contributors just last week.
Random Paul he is not a republican.He is the village idiot
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You make it sound like Republicans and village idiots are mutually exclusive. Sadly, they’re not
After we bailed these bastards out with taxpayer money these babksters with the help of the corporate media shills and our do nothing congress who voted for the bailouts without any conditions attached (remember the one sheet of paper by Paulson).
Now they they have the nerve to ask for austerity from us. And the democratic politicians, even the Senator from Illinois Dick Durban is silent and acted like he is ready to cave.
Meanwhile, we have these freakin idiots who probably are diehold Obama fans on Black Friday ready to kill, runover, and hurt someone to buy something they don’t need. Where the f@#k is Michael, Chris Hedges, and Occupy. We need you badly.