Ben Says Fiscal Cliff, Paul Says Austerity Bomb, Heidi Explains All

Heidi N. Moore has a delicious translation of Speaker Boehner’s letter to Pres. Obama about THE FISCAL CLIFF, and you should definitely read it. (“We’ve been pretty clear that we don’t want to raise taxes on people making more than $250,000 a year — but if we absolutely have to, then we insist on cutting government spending on programs like social security and Medicare.”)

If this sarcasm piques your interest in the cliff and now you’re like, oh maybe I should read about that I guess, MAY I SUGGEST this thread in which Heidi and her Guardian pal Dominic Rushe answer reader questions about the fiscal cliff. Their responses are extremely readable and understandable.

FOR EXAMPLE, Heidi answered the question, “Why is it called a cliff?” super simply (TO SCARE YOU), and then explained the whole mess in four short paragraphs.

“There’s no good reason that it’s called a cliff! The phrase was invented by Federal Reserve chairman Ben Bernanke in February and everyone stuck with it.

“The idea of a “cliff” was meant to represent some kind of severe step-off to show that we need to solve the problem at a firm point in space and time. That’s why people have been coming up with other severe examples; Paul Krugman, for instance, calls it “an austerity bomb,” because the spending cuts will usher in an official period of U.S. budget austerity.

“There’s the question of course, of whether there is a real deadline here. The legislation — the Budget Control Act of 2011 — gives a firm deadline of Jan. 2, 2013 to figure this all out or else suffer the spending cuts and tax hikes. But many others make a compelling case that really, we won’t be in trouble all at once. The spending cuts can be reversed or handled over time, as will the tax hikes. It’s not as if the economy will fall into a recession at midnight on January 2. That’s why some people prefer to call it a “fiscal slope” — because the trouble will start gradually rather than all at once.

“However, there are other deadlines to be concerned about. For instance, we will have to raise the U.S. borrowing limit, called “the debt ceiling,” by February or March, according to the U.S. Treasury. Last year, Republicans refused to raise the debt ceiling until Obama and Democrats acceded to some of their budget demands. It’s easy to picture another such scenario if Congress leaves any part of the fiscal cliff to be resolved after January 2. I hope that’s helpful. Thanks for writing in.”

Support The Billfold

The Billfold continues to exist thanks to support from our readers. Help us continue to do our work by making a monthly pledge on Patreon or a one-time-only contribution through PayPal.