On the Origin of the Fiscal Cliff

When you Google search for “fiscal cliff,” it turns out that you get a lot of guides. The how-to’s of the fiscal cliffs, the Q&A around the fiscal cliff, the in’s and out’s of the fiscal cliff… you can imagine the rest. These guides promise to tell us what we need to know about the troubling financial situation we are in.

For example, in this Los Angeles Times article , Doyle McManus tells us that, “First, it’s not really a cliff; it’s merely a steep, scary slope. If Congress doesn’t act, federal taxes will increase by more than $500 billion next year and federal spending will be cut by about $200 billion. The impact would be equivalent to subtracting about 4% of gross domestic product, enough to push the economy into recession.” He explains that Secretary of the Treasury Timothy Geithner could postpone the tax changes until a deal is made. McManus suggests that no matter what, some stopgap measure will be reached – the real question now is whether it will be reached calmly or chaotically. Our approach to the stopgap bill will have important repercussions in financial markets, but, McManus says, “This is not the outline of a deal — not yet. But as Erskine Bowles, the author of another compromise plan, said this week, ‘Every offer put forward brings us closer to a deal.’”

The Washington Post has a whole section in its politics section devoted to the fiscal cliff, with graphics to demonstrate what it would mean to go over the cliff, videos of leaders commenting on the problem, and a ticker of news stories updated by the hour. On Tuesday, Dec. 4, the story headlines focused on Wall Street’s apparent calm in the face of these talks. “Fiscal Cliff’ Warning yet to Faze Wall Street” and “Wall Street not showing much fiscal fear” were both headlines in the evening. The Post approach highlights the various responses to the cliff: how important is it, are we going to go off it, how worried should we really be about it? The emphasis is perhaps more on how different sectors are responding to the cliff, and less on the efforts in Washington to resolve the dilemma.

Finally, the Wall Street Journal has a helpful Q&A article with questions like, “What’s the economic impact of going off the cliff?” and “Why are we arguing about this all over again?” The goal of all these guides is to break down the problem into understandable segments – understanding why we are rehashing tax rates, why a gridlocked Congress didn’t make a decision about tax rates before, and what that means for taking action now. They help us understand the terms of the debate. The Journaldescribes the current status of the conflict as, “Thus far, Republicans have offered about $800 billion in new tax revenue by limiting deductions taxpayers can take for things like mortgage-interest payments and charitable donations. Mr. Obama wants that plus the $1 trillion or so that would come from raising top rates on income and investment taxes. Between those two numbers is where the sides would likely have to meet to get a deal.” Knowing the terms (and the stakes) of these conversations will go a long way to making us more informed citizens.

But we aren’t truly informed until we ask a question that is treated only momentarily in these guides – “How did we get here?” The New York Times guide has this as the third question in a series – most of which have to do with proposed solutions – and the Wall Street Journal asks, “Why are we facing a fiscal cliff at all?” but leaves the rest of the article for discussing the meaning and feasibility of various Congressional and presidential solutions.

I’m not opposed to focus – even strongly focus – on the present moment. Decisions by our Congress members must be made, a deal must be brokered, or, as these news outlets rightly say, there will be serious repercussions for financial markets, middle class pocketbooks, and much more. But shouldn’t our solution take into account the reason we are facing this problem in this way? A stopgap bill will keep us from falling off the cliff immediately, like a last minute rope thrown to a hiker in dire straits – but it won’t build us a bridge to the other side. It won’t help us change anything substantial about the conversation about taxes and fiscal responsibility that plagues Congress, causes gridlock, and will ultimately yield more fiscal cliffs until our rope runs out.

So as citizens anxious to be informed, and to see economic justice and stability achieved, I urge us to ask ourselves, our members of Congress, and our institutions of civil society more broadly: how did we get here? What are the origins of our fiscal cliff? How could we avoid them in creating new tax policy? How can we navigate disagreement more peacefully?

If we hope to become leaders who really advance this conversation (and I hope we do!), we must ask about the real beginning of the problem. Only then will we find a meaningful solution.

-Hilary Sherratt is a recent graduate from Gordon College, where she majored in Religion, Ethics and Politics. She is currently working as a grant writer at Gordon, and loves all kinds of writing. She hopes to eventually get her PhD in theology or history. She blogs about everyday life athttp://thewildlove.wordpress.com and tweets at @hilarysherratt
Photo courtesy of Emmanuel Huybrechts