Some pundits on why "going over the fiscal cliff" might not be such a bad thing.

[randomness]

I wasn't particularly surprised Jonathan Chait came out in favor of letting the tax cuts expire and letting the sequester's mandatory spending cuts take effect:

In reality, nothing bad is likely to happen at the beginning of January. The automatic tax hikes and spending cuts will occur cumulatively over the course of an entire year. The Obama administration can delay implementing even the first dollar of the austerity, and even if we do have a few weeks of higher taxes and spending cuts, it can be retroactively canceled out once a deal is completed. The metaphor of a “cliff,” in which one step over goes all the way to the bottom, is utterly misguided.

...

What will change on January 1 is bargaining leverage. Once the Bush tax cuts have expired, then the two parties can much more easily agree on a deal to pass a big tax cut and substitute cuts to Social Security and Medicare for the scheduled cuts to discretionary spending. As a side benefit, the dreaded Grover Norquist tax pledge will be technically moot. Liberals such as me like this idea a lot.

It was also not much of a shock to hear that Matt Yglesias agrees:

Politics aside, there's no serious argument to be made against the idea of sending all the members of Congress home and then negotiating on budget matters under the new baseline. From the new baseline, all Democrats and Republicans disagree about is how much to cut taxes by and how much to increase spending. Those are issues where compromise can be found. It'll take some negotiating, but it can get done fairly easily.

But now Megan McArdle is joining in:

So maybe the first cliff—the one coming in January—is the lesser of two evils. It just might achieve what white papers and impassioned pleas have so far failed to do: scare some sense into our legislators.

Personally, I'm all for letting the sequester take effect if it actually reduces the money going to the military-industrial and security-industrial complexes. Cynic that I am, however, I'm sure our elected representatives will find a way to make sure the war and internal spy lobbies don't lose a dime. I'm in favor of spending cuts if the budgets for Defense and Homeland Security get cut.

Comments

[r-ness.livejournal.com]

Yeah. McArdle's backed by the Koch brothers, which is why I thought her coming out in favor of letting the cuts happen was noteworthy. That Krauthammer thinks so too means more conservative pundits may be okay with it. He's saying no deal rather than a bad deal. I can totally get behind that. I just expect the natural inclination of Congress is to do a bad deal.

It wouldn't be a big surprise to me if the word among the pundit class is that the negotiations are doomed so it's time to write articles on why this isn't going to be such a bad thing. It's been so hyped up to now that they'd look really dumb if January came without a deal and life went on anyway.

"Fiscal cliff" was a phrase Bernanke came up with. I didn't think it was a particularly good description in the first place.

[fin9901.livejournal.com]

Yeah, I've been saying for a while now that we're already over the fiscal cliff (4 straight years of $1T+ deficits will do that), and the only question is whether we're going to have a hard landing, or a crash landing. Kicking the can down the road only lowers the ground, which will make the crash that much harder when it happens.