First, even the CBO isn’t making an unequivocally negative case. If the government does nothing for the entirety of 2013 to offset the tax hikes and spending cuts mandated as of January 1, the CBO forecasts a recession of more than 1 percent in the first half of 2013 — but then 2 percent economic growth in the second half, accelerating even more in 2014. Over a decade, these measures will likely reduce deficits by as much as $10 trillion. We are so focused on the short-term pain of this cliff that we haven’t taken sufficient measure of the long-term benefits.
Washington’s Democratic and Republican power brokers have sent the message to the nation that going over the fiscal cliff is a worst-case scenario. But they’re not acting that way, not at all.
Instead, many of them have calculated that it’s better to go over the cliff — at least temporarily — than swallow a raw deal.
In truth, while the so called fiscal cliff may not be the exact best combination of spending cuts and tax hikes the reality is that every proposed solution does two things: raises taxes and cuts spending. In order to pay down our massive debt, this is what has to happen (though it’s unlikely those tax hikes will be used to pay down the debt.) The fiscal cliff is an imagined crisis. Not as some progressives say cause we can just keep spending without fear, but because no matter what we do this tightening of the belt must happen and the negative effects are short term and no matter what we do they will happen sometime.