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Home Publications Blogs Beat the Press Fiscal Cliff Notes Have no Place on NPR

Fiscal Cliff Notes Have no Place on NPR

Monday, 01 October 2012 15:15

I have always been a big fan of good headlines and let me begin by expressing my admiration for the folks at NPR for coming up with the title "Fiscal Cliff Notes" for their series on the budget standoff. But sometimes you can't use a title even if it's good. (My staff has restrained me from using many of my best titles and headlines.) "Fiscal Cliff Notes" belongs in that do not use box.

First and foremost the problem is that it is not accurate. It also helps push the Republican agenda on budget policy.

The reason that it is not accurate is that there is no cliff. Contrary to the image conveyed by the metaphor, pretty much nothing happens on January 1, 2013 if there is no budget deal in place. We will all be on a higher tax withholding schedule and in principle the government should be spending at a slower pace, but these effects will be virtually invisible on January 1. In fact, they will just barely be visible even if we go the whole month of January without a deal.

The tales of sharply slower growth and even a recession are based on Congress and the president going a whole year without a deal. At that point the economy will certainly feel the effects of higher with-holdings and slower spending, but that is not what happens from failing to reach a deal by January 1. (Here is a somewhat fuller discussion.)

This matters a great deal in the current context because the Republicans would very much like to force a deal before the end of the year when the immediate issue is raising taxes or not for various segments of the population. After January 1, the Bush tax cuts will have expired. At that point, the question will be who gets a tax cut. This would be a far more advantageous position for President Obama to negotiate from, assuming that he does win the election.

For this reason, wrongly implying an urgency to getting a deal before January 1 frames the debate on terms that are very advantageous to the Republicans in Congress. NPR should go back into the files and dig up a better headline for this series.

Comments (3)Add Comment
A few alternative headlines
written by David M, October 01, 2012 4:37
Fiscal Cliff Clavin (after the pompous, perpetually misinformed character from Cheers)

Fiscal Clifford, the big shaggy-dog-story (that can go on forever without saying anything)

Fiscal Cliff-off-the-ol'-block (direct descendant of the budget scare tactics we've seen so many times before)
NYT falls into same trap ...
written by julian, October 02, 2012 4:34
.. sadly - see http://www.nytimes.com/2012/10...l?hp&_r=0. Do those guys never take note of your comments? No doubt it helps to make talk about "savings from changes to social programs like Medicare and Social Security" seem more of a necessity when it's presented against an alarmist backdrop of a "fiscal cliff"
ooops...i thought you would remind folks that debt v taxes is unimportant.
written by pete, October 02, 2012 9:45
In the past you have reminded folks that only under unusual (i.e., irrational) circumstances does it matter whether the govt finances its spending with debt (current framework) or taxes (the cliff). In your columns, you often remind folks that debt to GDP does not matter, from which the clear inference is that debt v taxes is irrelevant. Spending (not transfers), which might matter, does not decline, I suspect, but probably only falls below projected growth levels. This is for other folks to figure out...to me watching projections and CBO stuff are like a 3 card monte game. Again, probably not a cut per se. No cliff, even if congress does nothing next year.

Now about that the spending anyway:
Many like Rachel Madow want to keep us addicted to high energy use, subsidizing wind and solar with govt power lines, killing bats and raptors, and building more freeways so families can continue to live segregated lives far from the city in the pretty suburbs and drive in on their cute electric cars. So these folks want more spending, more damming up wild rivers and so forth. Whose backyard will those power lines go in? Nobody wants them. Anyway thankfully these will be delayed with the cliff, for sure.

And of course 65 years after vanquishing Japan and Germany the US has troops all over the place, and in new places like the mideast. The pentagon could protect the United States without being the worlds policeman. Cutting the overseas defense spending where dollars flow to Japan, Germany, Afgahns, Saudis, etc., would have to be a net gain for US gnp.

Plenty of costless cuts.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.