The big election is now more than a week past, but there still are some lingering questions out there.
One of the big ones is whether Congress and the White House can forge a sensible deal to reduce the annual budget deficit, which these days tops an unsustainable $1 trillion. That’s the “fiscal cliff” you’ve heard so much about in the media.
To explore this issue I spoke this week with Nicolaus Tideman, who for 39 years has taught economics at Virginia Tech. Early in his career, he also served as senior staff economist for the President’s Council of Economic Advisors.
I also sought some to put some questions to western Virginia’s House congressional delegation — Reps. Bob Goodlatte, R-Roanoke County; Morgan Griffith, R-Salem; and Robert Hurt, R-Chatham. But I was far less successful in that endeavor.
If an agreement isn’t reached on the budget, huge and automatic budget cuts would take effect early next year. Meanwhile, tax cuts Congress enacted in 2001 and 2003 would automatically expire for everyone, so everyone’s taxes will increase.
It would mean much less government spending, and less consumer spending, too, because those tax increases will take money out of everyone’s pockets. That will hurt businesses. That’s the so-called “fiscal cliff.”
The nonpartisan Congressional Budget Office says it would push this nation into another recession. Tideman agrees with their assessment.
But he also said that despite the hype you hear in the news lately, the fears are to a certain extent overblown. In the short term, “I think that relatively little will happen,” he said.
That’s not because the consequences of inaction are unfounded, Tideman added. Rather, it’s because the notion of long-term inaction on the issue by our elected leaders in Washington is pretty much inconceivable.
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