Danger Ahead for the Economy
Late last month, the Congressional Budget Office (CBO) released an alarming report—that the country was headed toward a “fiscal cliff” in January 2013, which could shatter an already fragile economic recovery. The culprit? A one-two punch of the expiration of President Bush’s tax cuts and a series of massive spending cuts borne of the debt ceiling debate from last August.
The irony of the situation is that the combination of spending cuts and tax hikes will make ample headway on the national debt, but this headway will likely come at the cost of a renewed recession. Though there is ample time for Congress to take action to prevent or lessen the impact of the jumping off the cliff, such late-breaking action would do little to calm investors scared of the consequences of inaction, thus amplifying the impact of jumping off the cliff. Indeed, fear of the consequences of inaction have already prompted many businesses to remain lean for the time being, rather than expanding.
Dithering on the part of Congress on this key issue will only imperil the economy. The well-being of working families across the country, in turn, will be caught in the crossfire—at a time when neither the economy nor many families can afford to be hit by another downturn. The situation reminds me of a passage in Isaiah: “If a poor man requests money from you and you have nothing to give him, speak to him consolingly. It is forbidden to upbraid a poor person or to shout at him because his heart is broken and contrite…for it is written, ‘To revive the spirit of the humble, and to revive the heard of the contrite’ (Isaiah 57:15). Congress should be trying to revive the economy on behalf of working families —not shouting at them, or worsening their situation, by failing to act to prevent the fiscal cliff.
Image courtesy The Contemporary Condition