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Posts tagged ‘Fiscal Slope’

Nov 7

jim mccaughan's picture

The Die is Cast, but Uncertainty Remains

Another election cycle is over, though with over US$6 billion spent on the various campaigns across the country, the political landscape looks practically the same today as it did yesterday. This, I fear, may be the outcome the U.S. economy could most ill afford at this time. While President Obama’s reelection delivers clarity on a few issues important to the economy, the partisan status quo that remains in Congress likely raises the risk of recession.

First, the clarity. With Romney out of the equation, President Obama’s signature health care reform is probably cemented in place. You can debate the economic impacts of the legislation, but at least businesses and individuals will know that it’s here to stay and can begin forming up plans to adjust to the new health care regime. Next, Fed chairman Ben Bernanke still has a job…if he wants it. Governor Romney had pledged to remove Bernanke from his post when his second term expires in 2014. This probably ensures that Bernanke’s easy-money policies will continue, even if he declines a third term.

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Sep 20

robin anderson

Fiscal Cliff or More of a Fiscal Pothole?

Based on all the heated partisan talk of the so-called “fiscal cliff,” you could be forgiven for thinking that this precipice of tax-hike-and-spending-cut doom was a five mile drop straight to the bread lines for the majority of American taxpayers and businesses. Ezra Klein and his staff over at Wonkblog (check out posts from Ezra Klein and Suzy Khimm for details) have done a good job of getting across the alternate (and maybe more realistic) idea of a “fiscal slope.”  If you’re feeling really nerdy, check out the original paper Ezra and Co. cited from the Center on Budget and Policy Priorities. The basic idea is that the U.S. economy won’t drop into free fall come January or February of 2013. The expiration of the Bush era tax cuts won’t start having an effect until people file their 2013 taxes – sometime between January and April of 2014. The spending cuts don’t all come at once either. They’re spaced gradually over 2013 and the following years. So, not a sheer economic drop – more like a 45-degree hillside. It’d still be bad and the U.S. economy would probably wind up in recession, but it’s not falling into an abyss at 1,000 miles an hour.

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