Should We Swallow the Fiscal Cliff While We Have the Chance?
Posted at 12:45 p.m. on Nov. 30, 2012
Ryan Avent explains why those who advocate taking the plunge off the “fiscal cliff” while the economy is growing are not seeing the bigger picture.
“First, the 2.7% growth rate is less encouraging than one might initially expect… Underlying growth is weaker and probably below trend; America is a little closer to contraction than the headline figure suggests, meaning that a fiscal blow is more likely to sink the economy into recession.”
“Congress could extend much of the policies due to expire at year’s end and the budget would still achieve primary balance by mid-decade… When would be the time for aggressive fiscal consolidation? My view is that it shouldn’t be on the table until the economy is on the way to putting the zero lower bound well in its rear-view mirror.”