Debt! Deficit! Fiscal cliff! How to make sense of it all?
For two years now, there's been increasing talk and more than a little fear-mongering about the runaway growth of our federal budget deficit. Now something called the "fiscal cliff" is making headlines.
The fiscal cliff refers to a series of federal spending cuts and tax increases that are all scheduled to take effect on New Year's Day. If these changes happen all at once, they could easily turn our weak recovery into a double-dip recession. But over the coming weeks, lawmakers will have the opportunity to negotiate a better budget deal for this country — and, believe it or not, you can help.
Contrary to what most people think, the fiscal cliff refers to what will happen if the government reduces the deficit, not if it starts to run a larger deficit. The spending cuts and tax increases scheduled to start in 2013 would reduce the deficit by hundreds of billions of dollars as compared to 2012. You might ask: Isn't that a good thing?
You could say it's way too much of a good thing, and bad timing to boot. By some estimates, the pending across-the-board budget cuts would eliminate as many as 2 million jobs in 2013. Teachers, firefighters, and even military contractors would be out of work. The government also would cut orders for goods and services from the private sector — like the cement it takes to repair bridges and the equipment required for maintaining our national parks — and those businesses would suffer losses.
Just because these cuts would be harmful now doesn't mean we can never slim down government spending. It just means we should choose which things to cut — instead of slashing funding across the board — and then make those cuts gradually as the private sector adds jobs. That way, unemployed workers would have a better shot at finding a new job.
Our lawmakers have a delicate task before them. It's their job to hammer out a budget deal that avoids these immediate cuts and replaces them with a smarter, long-term plan for deficit reduction. Partisan gridlock has prevented such negotiations from taking place, and this is where you can help.
Many Republican lawmakers have said the only way to slim down a deficit is to reduce spending, while many Democratic lawmakers have said we must also raise taxes on wealthy Americans. Meanwhile, more and more Americans are asking lawmakers to compromise and make a deal that addresses both sides of the budget: taxes and spending. There's growing momentum behind this idea.
You have a role to play too. Call your legislators. Ask them to work across the aisle to come up with a bipartisan deal to replace deep, immediate cuts with a long-term plan that addresses the whole budget: taxes and spending.
OtherWords guest columnist Mattea Kramer is a senior research analyst at National Priorities Project and the lead author of the new book A People's Guide to the Federal Budget. OtherWords.org