Like a lot of metaphors, the term “fiscal cliff”—first used to describe America’s automatic year-end package of tax increases and spending cuts by Federal Reserve Chairman Ben Bernanke last February—is loaded. Nobody, after all, wants to fall off a cliff.
Bernanke was warning against legislative inaction that would lead to a tumble, and by now you’re familiar with the chorus of other voices who think the cliff is a disaster in the making, including the International Monetary Fund, many CEOs, European leaders, small businesses, and the world’s seven largest economies, not to mention most of the legislators who created the cliff as a mechanism to force a more reasonable debt reduction deal. It’s already hurting US business, and will cause a recession next year if nothing is done.
Given that the US has, despite its woes, somehow been occupying the role of “bright spot” of the world’s economy recently, America’s long-standing political gridlock once again takes the stage as the great threat to global economic security. (The European Commission must be sighing with relief). Given the wide-ranging breadth of issues, policies, industries and possible outcomes involved, we think the next two months of frantic dealmaking is just the kind of wicked problem that deserves to be treated as a Quartz obsession.
After all the time we have spent watching bailouts in Europe and the austerity packages that accompany them, it seems only right to devote some attention to the US’s fiscal consolidation, which would occur with far more speed and severity than any in recent memory.
There are just 10 weeks (69 days, to be precise) until the fiscal cliff hits, but that doesn’t get at the level of urgency: between now and the end of the year, the House of Representatives meets on only 16 days (eight in November, eight in December). Negotiations can of course take place on other days, but it’s harder because members of Congress are often out of town. And the procedural work to get a complex piece of legislation passed can take several days. Congress insiders say they are acutely conscious of the time constraints.
But here’s some good news—and a reminder about the weakness of loaded metaphors. Running out of time and reaching the trigger date of Jan. 1, 2013 effectively presses the reset button on a good decade of partisan budget squabbling, creating brighter hopes for a more growth-friendly budget deal.