The Advantages of Going Over the Fiscal Cliff
By Holly A. Bell
Fiscal conservatives shouldn’t be too alarmed that we are about to fall off the “Fiscal Cliff“. Like drug addicts who have to hit bottom before they are willing to help themselves, our elected Representatives need to find themselves in the garbage and rat infested gutter at the bottom of the cliff before recovery can begin.
So what are the advantages of going off the Fiscal Cliff? First, it is now much more likely that a deal can be reached. It is psychologically easier for Republicans to support tax cuts and Democrats to support spending increases, both of which will have to happen to climb back up the hill.
Second, the much hyped “worst-case scenario” is upon us, yet the planet hasn’t fallen off its axis. Falling off the Fiscal Cliff actually ends some uncertainty that can cause stagnation in business decisions. Businesses and markets will now begin to adjust based on this new information, even though we might not like how they do it.
And finally, as many people will lose their unemployment benefits, they might be forced back to work in part-time and low wage jobs. While this is not a good thing at an individual level, the government is ultimately concerned with macroeconomics. We might see the unemployment level drop while wage rates continue to trend downward. By hitting a wage rate “bottom” and devaluing our currency through Fed actions, our products become more attractive as exports. This, of course, assumes the rest of the world has money to buy them.
Have a great 2013 everyone and I’ll see you on the climb back up the hill.
It is great to see someone with a logical mind 🙂 As I understand it, the real “fiscal cliff” is yet to come, if our Congress does not start working on the $11 trillion deficit. Just making ends meet for the next year (which is not going to happen anyway) does not constitute a “fiscal cliff” in my estimation, but it does help publicity for our newscasters 🙁
[WORDPRESS HASHCASH] The poster sent us ‘0 which is not a hashcash value.
Holly, I myself am less worried about the fiscal cliff than I am about the natioal debt Taxing more is bad enough, but adding a $ trillion or moore to that debt annually, is much worse. With fewer workers paying taxes, they (the Government – Democrats) will want to raise taxes even more. What will we do when intrest rates rise and a larger percentage of those taxes are needed just to service the debt?
[WORDPRESS HASHCASH] The poster sent us ‘0 which is not a hashcash value.
The debt ceiling is a big deal, but I\’m actually happier that the spending cut debate is now going to be \”packaged\” with the debt ceiling debate. There are significant incentives on both sides to reach a deal. Dems need debt ceiling increase and GOP needs spending cuts.
[WORDPRESS HASHCASH] The poster sent us \’0 which is not a hashcash value.