While Congress and the media obsess over the “fiscal cliff,” there is a growing dissent amongst some politicians and economists as to how the issue is being labeled. More appropriate terms, critics of the “fiscal cliff” argue, may include: “fiscal slope,” “gradual fiscal slope,” “fiscal curve,” “taxmageddon,” and “austerity crisis.” These alternatives attempt to reflect the idea that the fiscal cliff, a series of mandatory budget cuts and tax hikes that kick-in at the end of the year, is not quite the doomsday that falling off a cliff implies.
As Ed Ardeni, president and chief investment strategist for institutional investor advisory Yardeni Research, put it:
“We’re not going to fall off the edge of the earth at the beginning of next year. When you fall off a cliff you die. So it’s a bit of an exaggeration to say that’s what we’re facing here.”
Similarly, Sen. Bernie Sanders (I-Vt.), noted that even if the deadline is missed by a month or two, “I don’t think a whole lot of people will know the difference…it’s not like something cataclysmic happens on Dec. 31.”
So what’s all the fuss about? It’s true that over the long-term, if a deal is not reached, the economy could dip into another recession. The CBO estimates that by the end of 2013 unemployment would jump to 9.1%, real GDP would decline by 0.5%, and the average taxpayer would be burdened with a $3,500 tax hike. However, missing the deadline is not the end of the world. Lawmakers could still enact legislation after Dec. 31 and cut taxes retroactively to account for any increase taxpayers experienced in the previous month(s). No one is arguing this is an ideal outcome, but some on the left fear that the apocalyptic story implied by a “fiscal cliff” is pushing a Republican agenda for massive spending cuts to welfare and other government programs favored by Democrats. Using a term like “austerity crisis,” as Washington Post and Bloomberg columnist Ezra Klein prefers, may make it less easy to justify drastic budget cuts.
The “fiscal cliff” could prove to be another failure in Democratic messaging, akin to Obamacare over the Affordable Health Care Act, or job-creators over the one percent. If “fiscal cliff,” is a Republican invention though, it’s not working well — recent polls suggest most Americans would pin the blame for a failure to reach an agreement on Congressional Republicans.
But the verdict on “fiscal cliff,” isn’t necessarily split along party lines. Rep. John Shimkus (R-Ill) says that, “People are trying to scare us that it’s a cliff. I think people believe it’s a cliff, but I don’t know if you really know until you jump off.” On the other hand, Democratic Rep. Jim Moran argues, “Just keep calling it a cliff so we can get people to put the brakes on and come up with a reasonable way to stop the train of going in the direction it’s going,” and retiring Senate Budget Committee Chairman Kent Conrad (D-ND) adds, “I think it does communicate that you’re at a defining moment here.” Even President Obama uses the term casually, as does his chairman of the White House Council of Economic Advisors, Alan Krueger, albeit in a less dire context than most.
News organizations have fully embraced the “fiscal cliff.” POLITICO compiled some outstanding examples of news outlets’ flaunting of “cliff” rhetoric: “MSNBC has flashed ‘Fiscal Cliffhanger’ across its screen as it dissects the issue. CNBC has a ‘Call to Action’ special report on its website — subtitled ‘America’s looming economic crisis.’” Even this blog is guilty — we’ve added a “Fiscal Cliff,” category for our posts and considered (although the idea was dropped after this post) changing our Federal Income Tax Filing Milestone on our home page to a fiscal cliff countdown.
With less than a month before the deadline, the “cliff” metaphor is here to stay. “The impression has already been created, and if it’s unfavorable, we’ve got it now, and I think we’re saddled with it,” said Rep. John Conyers (D-MI).
If you’re not on the “cliff” bandwagon, our favorite alternative is a “fiscal black hole,” coined by Mark Zandi, former Chief Economic Advisor to John McCain‘s 2008 campaign and opposer to the “cliff” terminology. He argues, “with each passing day that policymakers fail to act, the greater the gravitational pull of the dark recession that will occur if they don’t.”
Written by: Davis Burroughs
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