Chad Stone, chief economist at the Center on Budget and Policy Priorities, thinks all this talk of a “fiscal cliff” is dangerously misinformed. “The economy will not go over a cliff and immediately plunge into another Great Recession in the first week of January,” he writes.
(David Marcado – Reuters)
But the fact that so many politicians and analysts think it will, could, he worries, lead to some very bad negotiating. “The greater danger is that misguided fears about the economy going over a ‘fiscal cliff into another Great Recession will lead policymakers to believe they have to take some action, no matter how ill-conceived and damaging to long-term deficit reduction, before the end of the year.”
In a new paper, Stone argues that we’re really facing a “fiscal slope” — and make no mistake, it “could ultimately lead to a recession in 2013.” But if you go policy by policy, we’re not facing a Wile E. Coyote moment in which Congress runs over the edge and, on Jan. 1, 2013, looks down and finds there’s nothing underneath the economy.