Economy  
comments_image Comments

Dean Baker: The Biggest Myth in Obama-GOP Spending Showdown is the "Fiscal Cliff" Itself

Economist Dean Baker explains that "there’s an endless number of myths, but the first and foremost is that we face any sort of cliff."
 
 
Share
 
 
 

JUAN GONZÁLEZ: President Obama met for a third time with House Speaker John Boehner on Thursday in an attempt to discuss ways to avert the so-called fiscal cliff. The White House and congressional Republicans are hoping to strike a spending deal before a round of tax hikes and spending cuts take effect in January. The White House and Republicans continue to express public criticism of each other amidst the ongoing behind-the-scenes talks. This is White House spokesperson Jay Carney.

JAY CARNEY: The process continues. There are clear obstacles here, the principal one being the rather amazing insistence, given the road we’ve traveled these past several years, given the degree to which this was debated, the degree—the degree to which independent economists back up the president’s position, we still have this insistence that we’re not going to do anything that doesn’t include tax cuts for the wealthy from the Republicans. And that’s just—that’s just not acceptable to the president.

JUAN GONZÁLEZ: With little more than two weeks before the deadline, President Obama insists on an immediate increase in the top two income-tax rates as a condition for further negotiations on changes to spending and entitlement programs. But House Speaker Boehner said Washington’s, quote, "spending problem" was the biggest roadblock to reaching a deal, and he has urged the White House to identify more spending cuts.

HOUSE SPEAKER JOHN BOEHNER: Washington has a spending problem that can’t be fixed with tax increases alone. The right answers is to start cutting spending, addressing our debt, and the paving the way for a long-term economic growth. Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow walk any agreement and walk our economy right up to the fiscal cliff.

AMY GOODMAN: Well, to talk more about the debates around the so-called fiscal cliff, we go to Washington, D.C., to speak with Dean Baker, economist and co-director of the Center for Economic and Policy Research.

Dean, welcome to  Democracy Now! Talk about the myths around the fiscal cliff.

DEAN BAKER: Well, there’s an endless number of myths, but the first and foremost is that we face any sort of cliff. You know, you’ve had this effort, certainly in Washington, to hype this December 31st deadline. Basically, if we miss that deadline, nothing happens. You know, you come to January 1st, we’ll be subject to higher tax withholding rates. Not a lot of us are going to get paid January 1st. If there’s a deal worked out somewhere in the first, second week of January, we’ll probably never see anything extra deducted from our paycheck, and even if we do, we’ll get it back in the second paycheck. I mean, no one wants to see money deducted out of their paycheck, but, you know, if you’re going to get it back in the second check—I mean, I know that will be a hardship for some people, but the impact on the economy will be pretty much minimal.

And on the spending side, President Obama controls—has enormous control over the pace of spending. And if there’s a deal outlined that—you know, outline of a deal that he sees with Congress, he’ll just keep spending in accordance with that deal. So this idea that, somehow, if we don’t get a deal by the end of the year, you know, we’re going to see the economy collapse, go into a recession, really that’s just totally dishonest. And I’ve seen that said I don’t know how many times. And it’s based—the basis for this is that we don’t have a deal all year. And the fact that you don’t have a deal December 31st does not mean you don’t get a deal by December 31st, 2013. And I think everyone knows that.

 
See more stories tagged with: