Originally Posted by Blart
At least you're consistent. Why isn't the GOP cheering on these sudden, mass spending cuts?
They will be. This fiscal cliff IS
the Grand compromise. Democrats get what they want: increased taxes. Republicans get what they want: budget cuts.
Yes, both sides will have to sacrifice some sacred cows to the flames, but you can see where this is going already. Krugman is encouraging Obama to practice brinkmanship, and already you're starting to hear conservative voices saying that the Republicans should walk away
Here's what the CBO says about it:
Substantial changes to tax and spending policies are scheduled to take effect in January 2013, significantly reducing the federal budget deficit. According to CBO’s projections, if all of that fiscal tightening occurs, real (inflation-adjusted) gross domestic product (GDP) will drop by 0.5 percent in 2013 (as measured by the change from the fourth quarter of 2012 to the fourth quarter of 2013)—reflecting a decline in the first half of the year and renewed growth at a modest pace later in the year. That contraction of the economy will cause employment to decline and the unemployment rate to rise to 9.1 percent in the fourth quarter of 2013. After next year, by the agency’s estimates, economic growth will pick up, and the labor market will strengthen, returning output to its potential level (reflecting a high rate of use of labor and capital) and shrinking the unemployment rate to 5.5 percent by 2018.
Output would be greater and unemployment lower in the next few years if some or all of the fiscal tightening scheduled under current law—sometimes called the fiscal cliff—was removed. However, CBO expects that even if all of the fiscal tightening was eliminated, the economy would remain below its potential and the unemployment rate would remain higher than usual for some time. Moreover, if the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.
Personally, I would just as soon see the payroll tax deductions kept into place, not to mention the Bush tax cuts themselves. Not to mention, I could do without the Obamacare tax raise that comes due. But is that's what it takes to eliminate $78 billion from the yearly budget in one shot, I'll take it for a start. I wasn't thrilled about the Bush tax cuts to begin with because they weren't passed with offsetting spending cuts. But getting spending cuts in Washington takes both sides pointing guns at eachothers heads and pulling the trigger and hoping they can survive the bullet, as we're about to find out.