Amidst the ongoing political negotiations and obsessive media coverage of the “fiscal cliff,” many politicians and economists are pleading for a re-branding of the term. Whether or not it should be re-dubbed a fiscal slope, gradual fiscal slope, fiscal curve, taxmageddon, austerity crisis, or other less exaggeratory terms is a matter of opinion; but it doesn’t take an expert to realize that the mandatory budget cuts and tax hikes that will go into place at year-end unless a deficit reduction deal is struck isn’t quite the doomsday that the word “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 we go past the deadline 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 find itself in 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 does not mean that this scenario would be irreparable. 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 situation, but some on the left fear that the armageddon scenario that a “fiscal cliff” implies is pushing a Republican agenda for massive spending cuts in welfare programs; using a term such as austerity crisis, as Washington Post and Bloomberg columnist Ezra Klein prefers, would make it less easy to justify these cuts. Herein lies another failure in Democratic messaging, akin to Obamacare over the Affordable Health Care Act, entitlement programs over welfare programs and referring to the wealthy as job-creators. If “fiscal cliff,” is a Republican invention though, it’s not working well – as recent polls suggest most Americans would pin the blame for a failure to reach an agreement on Congressional Republicans.
Now, this isn’t to say that all Democrats hate using “fiscal cliff,” or that all Republicans embrace the term. 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 says, “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.
One party that is undoubtedly obsessed with the “fiscal cliff” is the media. Dropping the term now would surely decrease ratings as audiences have become familiar and obsessive with it, so it’s unlikely they’ll change their rhetoric anytime soon. Politico.com highlights some examples of the media’s 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 the home page to a fiscal cliff countdown.
With less then 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.”
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I like Fiscal Slope.
Though Fiscal Cliff does imply the typical media rhetoric that paints ‘brave’ people as rising to the occasion (often in a pigheaded manner that does little to represent their districts), or ‘cowardly’ people from running away from what is necessary (necessary things being dictated by party lines, of course).
Fiscal Slope, however, implies the exact same thing subtlety with a very long and drawn out math joke, that probably isn’t as funny as it is witty and isn’t as witty as it was really lame.
Sorry.
Touche’
Taxmageddon…hahahahahaha!
Great analysis here. I wish the media would spend more time explaining the nuances as you have rather than opting for scare tactics and heavy-handed imagery.
Us too, Thanks!
U are a active wordpress viewer.. I like that… The fiscal cliff has evolved yet for the comment but I hope it comes out good for the both of us….
Depends… It’s less of an exaggeration than the “war on Christmas” or the “war on stay-at-home moms” that the media demands nowadays. Blowhard rhetoric is the name of the game. Adjusting for media inflation, “cliff” is about right.
Interesting way of looking at it, arra95!
“What do you think the “fiscal cliff” should be called?”
How about “the latest hysterical panic that the news is flogging because they got bored of death-in-your-medicine-cabinet stories?”
Snazzy– but hard to condense into a sound bite!!!
The problems are much worse than a “fiscal cliff” – the taxation issue is a walk in the park compared to reality. See http://deadlyclear.wordpress.com/2011/08/11/david-stockman-we-have-a-far-worse-fiscal-situation/ …for starters. Can we correct the problem? Not if the politicians and judiciary are unwilling to follow the rule of law because they think they can protect their assets and pensions. Reality is that the money is gone – $600 TRILLION – Gone!
Correction is made at the public level – not by elections but by removing our monies from Wall Street mutual funds and cashing in retirement and pension funds while we still can. First come, first served.
And if you still think it can all turn around in our lifetime – Read “It Takes a Pillage” by Nomi Prins, read the DeadlyClear blog, read BAILOUT by Neil Barofsky… and then consider taking your hard earned funds out and purchasing something tangible or sustainable. Because, believe it or not, ANYONE could end up like Enron or Hostess employees – at any time.
You will have to let us know the outcome of your poll! I wonder if the respondents will be biased though after reading your blog. What do you think?
Let’s hope not! You can get the opinion poll results by checking back in a few days, and voting again in the poll!
I am taking a course at University of California San Diego and our professor talked about this. I agree with you that this would be a bad thing! http://www.segmation.com
I am not sure if it matters whether you call the state of our economy a fiscal cliff or fiscal slope, etc. I do not know if the middle class can take another tax increase. I was also informed that part of this fiscal cliff those of us who have mortgages will not be able to claim the interest (points) on our taxes. If this is the case, I do not think this is fair because we are getting enough taken away from us. How do you feel?
Mortgage interest deductions have been a bedrock of the tax code for sometime. The deduction isn’t unlimited however, and never has been.
I think it’s an interesting issue for debate, because so many people claim the deduction, and the allowance of the deduction allows people to purchase homes they may not be able to afford otherwise. CBO has reported that elimination of the deduction could further destabilize an already shaky US economy with respect to existing home prices– I suspect that this issue will likely be resolved by further limits on the amount of indebtedness which is deductible.
I agree with you it is an interesting debate. Just as you said there are many people who claim the deduction (including myself). I do not know if I completely understand the logic of this concept. I think I will further this debate on my blog (www.letstalkrealestatedotnet.wordpress.com) to see if I can get others to chime in. I think it will be interesting see how others feel.
Where we are now reminds me of those old cartoons where like a rabbit or some toon character runs of a cliff (really) and is suspended in mid air with his legs oscillating rapidly for a few seconds before he crashes down.
Beep Beep! I think you are referring to the old road runner cartoons with Wile E. Coyote! Unfortunately, this is far more dire, and far less humorous.
Yeah yeah, that’s it! The consequences are far more dire, but the guys up on Capitol Hill dealing with it? Just about as clownish.
I’m looking forward to the cliff! Isn’t this what the people voted for? The Republicans are screwed no matter how they vote; vote present and let all those Obama fans see what their vote got them. NOTHING! Perhaps they think the millionaires fair share will make their lives better? Good luck! Oh, they’ll be just where Obama wants them..with their hands out, their mouths open,..living in poverty..screaming to get more more more..of somebody-elses stuff….Well, I’ve got a parachute…..Kinda selfish? Well, so wasn’t the last election..I’m just looking out for myself…
Large trampoline at the bottom. Excellent blog. Thank you.
Excellent blog. keep it up!
We talked about this in my class today. One of the biggest problems is entitlement. http://mccrackenlove.wordpress.com/2012/12/04/armageddon-because-we-deserve-it/
Reblogged this on Bored American Tribune. and commented:
Dear readers: read this before panicking. — J.W.
Thanks Jackson! Glad you liked it.
Fiscal Cliff – just to show that the situation is grim, instead of calming people down as if everything is still alright with terms like “austerity”, “slope” etc..
Such a great post, thanks for sharing. Very thought-provoking. Congrats on being Freshly Pressed!
Reblogged this on Reasoning with The Cunning One and commented:
Interesting read
Wake up and face it, it is the Democrats/ liberals/socialists who got us into this mess with their wild, unabated spending to make people dependent on them. Now they want small businesses to pay more money to them in taxes so they can feed that money to their supporters and to also line their own pockets.
It’s the workers feeding the non-workers, and the non-workers giving their votes to the Democrats who will give them the workers’ hard earned income in return. It’s a vicious and unjust cycle. It does not work in Europe, and it does not work in any state of the U.S. held in bondage by Democrats. Look at California and every other state run by Democrats. Ruin and hopeless is found in them more than in other states. Now, Obama wants to make this nationwide and with every class and group…but, mostly the working and successful.
The term “fiscal cliff” is akin to the constant and prolonged state of panic and terror that the Bush administration placed on America with the color coded threat warning, which oddly enough rarely lowered below “orange” at airports. I enjoyed your take on the over-hyping of the whole fiscal cliff thing. I would like Americans to tune out some of the corporate media that continue to scare us into accepting their spin on legislative reality.
I have written a couple of blogs on the subject and various political topics, click HERE and HERE if you would like to read some of my takes on this subject. Great post! I will be sure to follow your blog.
Wonderful work! This is the kind of information that are supposed to be shared around the net.
Disgrace on Google for no longer positioning this put up upper!
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http://www.youtube.com/watch?v=4ECi6WJpbzE Here is some good info that might explain why this is happening
While I do agree that the term “fiscal cliff” is very alarmist, and as another commenter pointed out, very reminiscent of the actions of the Bush administration.
However, I feel the term “fiscal slope” is inappropriate in equal measure. It subconsciously implies that the whole experience is going to be nothing more than a breezy down-hill ride, which we all know isn’t true.
I’m not a Shakespearean writer so I do not know exactly what we should be calling it, but I do know that I disagree with both of these terms.
First off, thanks for the thought provoking post!
As for my two cents on the matter, I merely raise my eyebrows for a moment when I hear such melodramatic titles being thrown about by the media and by our fearless leaders. I think I’ve become a bit desensitized due to the constant bombardment of hysterical propaganda in headlines. Yes the situation doesn’t look too pleasant, but we’ll survive somehow. I’ve tightened my belt and pinched my pennies for all of my young life to know that another day will come and we’ll get through this, melodramatic titles and all.
p.s. I will admit that I am amused by the “Taxmageddon” term though.
I belive dat my furture we be beright
Reblogged this on sarahjanelives and commented:
Fiscal slope…….I like it.
Fiscally Skewith…………………………………..
Boom.
It’s about time that the congress and President Obama come to grips with reality. Eventually all this could result in a Fiscal Cliff, but I also believe that the term is an exaggeration. Great perspective on what is happening with Congress and the President.
Thanks James!
You make some compelling points, which lead me to two thoughts.
1) I am reminded of the R.E.M. song, “It’s the End of the World as We Know It (and I feel fine)”
2) I’m going to go back and add “fiscal cliff” as a tag on my last two posts.
Thanks!
Yes! Awesome reference.. That song could certainly be used as a background for this post page.
Reblogged this on weloveourclass.