According to a new Gallup survey, more than eight in ten Americans think it is important or very important for Congress and President Obama to find a resolution to avert the automatic spending cuts and tax increases set to take place at the start of the new year, a scenario otherwise known as the fiscal cliff.
“Most Americans view finding an alternative plan for the pending Jan. 1 fiscal cliff as either extremely or very important, and want the president and members of the Senate and the House to compromise in order to find a solution,” Gallup writes.
Should the fiscal tightening goes into effect as scheduled, the nonpartisan Congressional Budget Office (CBO) projects a decline in GDP during 2013, and unemployment to spike back up to 9.1 percent.
The agency predicts, however, that after this shock year of fiscal contraction, “economic growth will pick up, and the labor market will strengthen, returning output to its potential level … and shrinking the unemployment rate to 5.5 percent by 2018.”
The CBO contends that the “sharp reduction in the deficit will cause the economy to contract,” causing economic pain for millions of Americans, but will be create a much more sustainable path for the federal budget moving forward.
“Congress, Washington has to do something eventually. The problem with the CBO report… is that it basically tells Congress what it wants to hear,” budget expert of the Cato Institute, Tad DeHaven told The Daily Caller News Foundation.
“Tax increase is bad, that’s what Republicans want to hear,” he continued. “Spending cuts, bad. Republicans want to hear that for military spending, Democrats for everything else.”
“Everyone acknowledges in the long run that the current state of affairs is unsustainable,” DeHaven added, though politicians say things like, “Well, the economy’s still weak and you can’t really do anything about it now because it’s bad for the economy” even if it would be better for the economy in the long term.
“Politicians generally think in terms of short term not long term, therefore, not surprisingly, the focus has been on the short term concerns,” rather than long term budget sustainability, such as what the CBO projects.
The nonpartisan Tax Foundation notes that the size, scope and importance of the fiscal cliff signifies the large uncertainty taxpayers face.
“With so much of the tax and budget system on short-term lease, and with the proposed permanent fixes so widely varying, speedy economic growth becomes untenable,” a Tax Foundation report says.
“We have this continuing uncertainty because the government does play such a large role and businesses and consumers are constantly wondering what’s going to happen next, because of the inability for Congress to get something done of a more permanent nature,” DeHaven said.
“Something will get done,” DeHaven said, “but I think it will amount to kicking the can down the road.”
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