Many progressive reporters and bloggers have been pushing the idea that going over the fiscal cliff into January will have very little effect on the economy and will actually help President Obama achieve his legislative goals. Indeed, Republican Sen. Barrasso hypothesized that President Obama was “eager” to go over the cliff.
Unfortunately, going over the fiscal cliff has real economic effects, and the progressives who are claiming otherwise are irresponsibly pushing the country to unnecessary economic pain.
“If it lasts three weeks, I’m pretty sure we get a recession out of it,” Princeton University economist and former Federal Reserve Vice Chairman Alan Blinder said Friday. “Once you start sliding downhill, once confidence is shattered…it takes a while to right the ship.”
“Markets are putting a very low weight on the notion that we actually go over the cliff for more than three days,” Mr. Blinder said. A delay beyond that “would really kick the chair out from under the markets’ current belief” and trigger a wider reaction among investors and then consumers.