This House Supports Going Over the Fiscal Cliff

  • November 27, 2012 · 7:00 PM
  • Commonwealth Club - Boardroom

The election was barely over and already we had lurched onto our next “crisis”, the suddenly looming “fiscal cliff”, a combination of tax increases and spending cuts that are set to take effect all at once at the end of the year. The “fiscal cliff” is a poison pill crafted by the White House and the Republicans to force both parties to come to terms after the election.  The net effect of higher taxes and reduced government spending will have disastrous consequences on our already fragile economy, it is said.

 

But will it really? Most economists have described it as more of a slope than a cliff, because government spending is spaced out over the year, and higher payroll deductions can always be postponed for a while. When you look at the details, the poison pill doesn’t seem so bad. The Bush-era tax breaks that are set to expire disproportionately benefit the rich anyway. Tax rates would simply return to those of the Clinton era, an era of prosperity and balanced budgets. Half of the spending cuts would apply to the military budget, already too high many would argue and larger than the rest of the world’s combined. Medicare and Social Security will not be touched.  

 

Then again, recessions are often triggered by the perception of the economy, not necessarily on reality. The uncertainty resulting from this unresolved media-hyped crisis may cause businesses to be overly cautious in investment and hiring decisions. Everyone will be hedging their bets waiting for the inevitable crash. Plus, government spending does have a tangible effect on the economy. As egregious as runaway spending by military contractors may be to some, everyone agrees that that many jobs are created, and many in states that have few other industries to employ their population. With unemployment already so high, perhaps now is not the time to make such cuts.  

 

So what is the right answer here? Join us at the next SFDebate to explore and debate this question.  

 

*** If you are interested in speaking or moderating, let the event organizer (Roy) know. ***  

 

Links for further reading:  

http://sandiegofreepress.org/2012/11/the-fiscal-cliff-why-obama-should-go-over-it-if-necessary /

http://www.poughkeepsiejournal.com/viewart/20121113/NEWS03/121113008/Most-US-won-t-able-escape-fiscal-cliff-



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  • Peter

    The speaker for the motion argued that the "fiscal cliff" is fear-mongering hype; the economy won't be too harmed by the tax increases because they affect mostly the rich, & Obama has said he'll freeze the payroll tax increase; it's not a "cliff" anyway because tax hikes & spending cuts are spaced over time. The speaker against pointed to non-partisan estimates of millions of job losses (including maybe yours) here in the one major country that's doing well economically, and a reduced U.S. credit rating if we go off this cliff. Some argued against the real pocketbook pain of the tax increases, and others pointed out that going off the cliff is recognized by all sides as a political failure. Another said that we don't know the motives of politicians & businessmen, only what they say. Beginning vote: 3 yea, 4 nay, 5 abstain. End vote: 8 yea (including BOTH speakers & moderator!), 4 nay, 4 abstain.

    December 8, 2012

  • Gary E. M.

    Well done! A difficult premise to counter.

    November 28, 2012

  • Jeff G

    Wheeeee!

    November 28, 2012

  • Joju

    If anybody is very interested in speaking against, let Roy know.

    November 27, 2012

  • clara d.

    anyone coming from Oakland/Berkeley?

    November 24, 2012

    • Peter

      Several of us are coming from Oakland and Berkeley. The easiest way to get to the Commonwealth Club is by BART. It's just a few steps from the Montgomery Street station.

      November 25, 2012

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