K&R if You Agree with Krugman & Howard Dean on the "Fiscal Cliff"

[muriel_volestrangler]

14. Are you sure they agree with each other?

Howard Dean thinks it's the best idea floating around. Paul Krugman thinks it's not too bad, and is good enough to be a fallback position, so that President Obama can say "OK, if you don't go for my proposal, we'll just do nothing and implement the 'cliff', and then carry on talking". Krugman also thinks it will be contractionary, because it implements austerity measures, which isn't what he wants, ideally.

Krugman:

In saying this, I don’t mean to minimize the very real economic dangers posed by the so-called fiscal cliff that is looming at the end of this year if the two parties can’t reach a deal. Both the Bush-era tax cuts and the Obama administration’s payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.

Nobody wants to see that happen. Yet it may happen all the same, and Mr. Obama has to be willing to let it happen if necessary.

Why? Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy, even though the nation can’t afford to make those tax cuts permanent and the public believes that taxes on the rich should go up — and they’re threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.
...
It’s worth pointing out that the fiscal cliff isn’t really a cliff. It’s not like the debt-ceiling confrontation, where terrible things might well have happened right away if the deadline had been missed. This time, nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013. So there’s time to bargain.

Howard Dean:

So I think we ought to go over the cliff; we ought to bite the bullet; it'll take seven and a half trillion dollars out of our deficit - that's a big number, and there will be sacrifices, but any politician who tells the American people there aren't going to be sacrifices for everybody is a liar.