At the stroke of midnight we officially went over the “fiscal cliff.” Amazingly the sky didn’t fall, crops haven’t failed and all law hasn’t been replaced by the Thunderdome.
The one positive thing I can say about this new possible deal is that I’m glad it only came after the “cliff deadline” had passed, helping to prove how idiotic all the fearmongering was.
The “fiscal cliff” was always just a collection of policy changes that would start around the first of the year. Together they would produce a drag on our weak economy only if they were allowed to remain in place for months. In addition, the Federal Reserve had the power to help mitigate some of the negative impact.
The potential damage of going over the cliff for a day or a week or even a month was minor. Especially given the fact that as long as people knew Congress would eventually make any tax changes retroactive, most people wouldn’t actually see a change their withholdings.
Now that we have gone over the cliff it is plain to see what a fake, manufactured crisis the whole thing was. We were given a big scary deadline so that the need to avoid this deadline could be used as an excuse for forcing very unpopular policies on the American people, like cutting Social Security.
At least by going over the deadline Congress helped show there was no “cliff” in the fiscal cliff.