Fiscal Cliff Notes Have no Place on NPR

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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.