How to Approach the ‘Fiscal Cliff’

[Geee]

National Review:

Negotiations between congressional Republicans and the White House will intensify this week as the deadline for steering clear of the year-end “fiscal cliff” approaches. Like the 2011 showdown over the debt limit, these talks will be a high-stakes affair for both parties, with maybe the potential for lasting political effects. With so much at stake, how should the GOP approach the talks? The following are a few suggestions for navigating the treacherous political waters that lie ahead.

Acknowledge the Economic and Policy Risks of Going Over the Cliff.

Tempting as it might be, the GOP should resist minimizing the very real and very likely negative consequences of going over the cliff. It is true that the risks are uncertain. Indeed, it is possible that, despite predictions to the contrary, the U.S. economy would continue to grow modestly, even with $500 billion in immediate tax hikes and spending cuts. And it is also possible that, despite massive cuts in U.S. military spending, there would be no real-world consequences in terms of degraded capacity to defend our interests worldwide.

But it would be highly irresponsible to assume that the effects of going over the cliff will be this benign. To the contrary, the best evidence indicates that imposing massive tax hikes and defense cuts in a very short period of time will both push the economy back into recession and leave the nation unprepared for any number of national-security contingencies. The Congressional Budget Office (CBO) has predicted that going over the cliff will push the unemployment rate back above 9 percent, causing hundreds of thousands of currently employed workers to lose their jobs in 2013. It is not possible to overstate how destabilizing this would be, coming as it would just a few short years after the worst financial crisis in decades. The political fallout would be substantial. Meanwhile, going over the cliff would force the Defense Department to impose indiscriminate cuts at the very moment when international tensions are rising in the most dangerous corners of the world. No serious person thinks this is a good idea.