Chart of the Day
Posted at 11:45 a.m. on Nov. 9, 2012
– Dylan Matthews summarizes the new CBO report on the fiscal cliff into this chart, showing the savings achieved by avoiding each component of the fiscal cliff and the resulting impact on GDP growth.
“Some policies are more important on the budget side than the GDP side. Letting the high-income Bush tax cuts lapse, for example, generates $42 billion in 2013 but hardly hurts GDP at all. By contrast, the defense cuts amount to $24 billion but hurts growth by 0.4 percent — quadruple the high-income cuts’ impact. The report also drives home how much the cliff is a tax phenomenon. The sequester makes up less than 13 percent of the total deficit reduction the cliff accomplishes. The other 87 percent, except for the expiration of the unemployment insurance extension, is all tax increases.”
