Should Washington act to prevent a 'fiscal cliff'?
The U.S. Capitol Building at dusk in Washington, D.C. Yesterday, the Congressional Budget Office warned of a U.S. recession if lawmakers do not take steps to avoid the upcoming "fiscal cliff."
David Brancaccio: The non-partisan Congressional Budget Office is worried that getting too aggressive to ease the federal budget deficit could have dire consequences.
Joining us to explain is budget watcher Stanley Collender who writes the blog, "Capital Gains and Games." Hello, Stan.
Collender: David, good to talk with you.
Brancaccio: What happened to the idea that the mature thing to do, if we wanted to heal our budget disease, is to raise taxes and cut spending?
Collender: Well, there’s nothing wrong doing those things. But one, you have to do it in moderation; and two -- more importantly -- you’ve got to do it at the right time. The “fiscal cliff” -- as Ben Bernanke keeps talking about, and the Congressional Budget Office wrote about yesterday -- is neither moderation nor the right time. If they do increases in taxes on almost everybody, and spending cuts all coming at the same time, then, according to the Congressional Budget Office, it would throw us into a recession almost immediately.
Brancaccio: Now, you’re in Washington right at this moment; you may have noticed that it’s an election year. Is this problem that we’re talking about pressing enough that politicians can put in some kind of a fix before we’re actually in recession?
Collender: Let me state this as directly as possible: no, no way, no how, and ain’t going to happen. Nothing is going to happen before the election, but that doesn't mean there won't be a lot of fireworks and finger pointing and recriminations between now and then to make it pretty ugly.
Brancaccio: Wow, a great lesson in politics and bugdet. Budget watcher Stan Collender is also a senior partner at the public affairs firm Qorvis. Stan, thank you very much.
Collender: My pleasure, as always.