A vast array of centrist pundits and business leaders are mobilizing to demand a bipartisan deficit agreement in order to avoid the dreaded fiscal cliff, a chorus that will reach deafening levels beginning immediately after the election. Oddly they are united by a lack of understanding of how this event that so terrifies them would actually work. Today William Galston warns that Obama must compromise with Republicans to strike a deal and avoid the dread cliff.
As I’ve noted before, that Galston is fretting about a second Obama term represents enormous progress for Obama. Galston was warning in 2008 that Obama was blowing his election and then moved on to warning he was blowing his reelection (by ignoring Ohio!). I am genuinely curious what will terrify Galston if and when Obama completes a second term (Galston 2017 headlines: Obama’s Presidential Library Is Behind Schedule — and May Never Be Built.)
Anyway, Galston today merges his general Obama doomsaying with the specific doomsaying of anti-deficit centrists over the fiscal cliff. Galston warns, “the post-cliff combination of tax increases and spending cuts would be enough to push the fragile economy back into recession.”
That is not how it works at all. Starting in January, there will be a series of automatic tax hikes and spending cuts that greatly improve Obama’s bargaining leverage. If those policies stay unchanged for the entire year, they would harm the economy a great deal. But if they only stay in place for a few weeks, or even a few months, the impact would be minor. Likewise, if you don’t eat anything for three weeks you could die, but if 6 p.m. comes and goes without dinner on the table, you don’t need to be scared.