Source: The Dallas Morning News
A huge fiscal cliff looms at year-end when massive tax increases, equal to about 3 ½ percent of GDP, and large and arbitrary spending cuts take effect automatically if Congress doesn’t do something before then. You might say the question is whether they will put a fence at the top of the cliff or an ambulance at the bottom. Gridlock will amount to a vote for the ambulance.
This harsh, cold-turkey, approach to our fiscal deficit has the advantage of forcing the issue one way or another. If left in place, it will finally deal with the deficit in a meaningful way, but the cost is likely to be tipping our fragile economy into another recession. Our GDP and job growth have already slowed substantially, and the European albatross is likely to continue to bedevil us.
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