Congratulations to the Election Day winners. So what do Tuesday's results mean for the fiscal outlook?
Think of it this way.
If the country is on an unsustainable fiscal path, which it is, and if continued partisan bickering will not solve this problem, which it won’t, and if divided government has been re-elected, which it has, then the only choices are calamity or compromise.
The Concord Coalition urges compromise.
That must begin immediately as the two parties negotiate a responsible alternative to the “fiscal cliff” – a combination of tax increases and spending cuts that will hit with such suddenness that it could throw the still-fragile economy back into recession.
But they can’t just kick the can down the road -- again. The year-end fiscal cliff is bad, but eventually we will need the longer-term deficit reduction produced by the policies comprising the fiscal cliff. It just needs to be phased-in in a more rational way, as proposed by the bipartisan Simpson-Bowles and Domenici-Rivlin recommendations.
The key is to agree on a process for dealing with the serious and structural imbalance between spending and taxes that, if left on autopilot, will damage the economy, stress the social safety net, diminish our world leadership and leave future generations saddled with a debt burden...