Despite anything anyone says in media or government, jumping off the fiscal cliff is a good temporary alternative to a bad budget deal from Democrats.

The 2011 debt ceiling resolution included automatic deficit reduction measures, known as the fiscal cliff. The measures begin at the end of December, and now bipartisan negotiations are happening to try to legislate around it.

If time runs out and the bipartisan talks result in a non-solution that delays dealing with the deficit and debt, then Republicans should let the fiscal cliff happen.

Granted, going over the fiscal cliff means automatic tax hikes and spending cuts, which the Congressional Budget Office says may trigger a return to economic recession. Specifically, driving off the fiscal cliff means $399 billion in new taxes, according to the CBO.

Mark Kantrowitz, founder of finaid.org, also projects an 8 percent across-the-board federal student aid cut if Washington fails to legislate in time. Overall, fiscal cliff sequestration would bring $105 billion in spending cuts, according to the CBO.

This is not a complete or lasting solution. “Whether or not we go over the fiscal cliff, it will not have any appreciable effect on when we hit the debt ceiling,” said Paul Van de Water of the nonpartisan Center on Budget Policy and Priorities in a Washington Post article.

In other words, even the fiscal cliff does not close the deficit, meaning even with these large tax hikes and spending cuts, we would still accumulate debt.

For sure, the real solution to the deficit problem is maintaining the George W. Bush tax cuts, streamlining the tax code and cutting spending — including entitlement spending — until we reach a surplus. Unfortunately, the fiscal cliff ends the Bush tax cuts.

Regardless, the fiscal cliff is a better alternative than what Democrats have put on the table in terms of decreasing debt.

President Barack Obama now demands $1.6 trillion in tax hikes on corporations and the wealthy during the next 10 years, and maintained tax cuts and mostly maintained entitlements for everyone else, according to The Washington Post.

Jay Carney, Obama’s press secretary, directed reporters to Obama’s 2013 budget proposal for the details on Obama’s fiscal cliff negotiating position, according to a White House transcript. Regarding deficits and debt, this is a non-solution, and Republicans should reject it.

Today, federal debt held by the public is 73 percent of gross domestic product. Obama’s plan —assuming Obama’s current requests match his 2013 budget, as Carney suggests — would increase federal debt held by the public to 76 percent of GDP in 2022, according to the CBO analysis of Obama’s 2013 budget proposal.

But jumping off the fiscal cliff would reduce federal debt held by the public from 73 percent of GDP to 58 percent of GDP in 2022, according to the CBO.

So despite the tax hikes and cuts to student aid and military spending that come with the fiscal cliff, assuming a reasonable bipartisan solution with real entitlement cuts cannot be reached, going over the cliff is a fiscally safer position for America while Republicans work on real budget solutions.

Michael Stikkel is a junior computer engineering major. His column appears weekly. He can be reached at mcstikke@syr.edu.

 

Published on November 28, 2012 at 2:59 am