Iowa Senator Tom Harkin says the so-called “fiscal cliff” that’s the subject of such concern lately does not exist. Harkin, a Democrat, says there is a “slope,” but no daunting financial precipice upon which our national economy is teetering.
He compares the doomsday predictions about our country’s looming fiscal issues to the Y-2-K scare of a dozen years ago, something that proved completely harmless. “The kind of fear I sense out there now that’s being touted about this fiscal cliff is not unlike what I heard back when the millennium changed,” Harkin says.
“Remember? Computers were going to crash. Everything was going to go to hell. Bank accounts were going to be wiped out. There was all this tremendous fear that was out there.”
The basis for the “cliff” is that on or around the first day of January, a series of $500-billion in tax increases and $200-billion in budget cuts will automatically take effect. Harkin disputes reports that forecast a national economic collapse if lawmakers aren’t able to prevent those actions from taking place.
“Everything’s not going to crash on January the 1st — or 2nd or 3rd or 4th or 5th or anything,” Harkin says. “We’ll come back in January with a new congress, with the same president sworn back in and we can deal with it then, if we have to. Obviously, yeah, we’d like to get it settled this month, but as I’ve said, no deal is better than a bad deal.”
If the “cliff” isn’t avoided, Harkin remains unconvinced we’re headed for another near-immediate recession. “Things aren’t going to crash on January the 1st,” Harkin says.
“The economy is resilient. We are going to have to address it in January and February but there’s no gun at everybody’s head saying if you don’t do it by Christmas that the whole economy is going to tank. Far from the truth.”
A report from the Congressional Budget Office says the combined $700-billion in tax cuts and budget cuts represents about four-percent of the gross domestic product, which could be a large enough leap to prompt a recession.