Support MI up for updates Subscribe up for updates
About Research Events Centers Newsroom Currency of Ideas
Milken Institute | Research | Publications | Viewpoints: The Fiscal Cliff: A Bipartisan Survival Plan
 The Fiscal Cliff: A Bipartisan Survival Plan
The Fiscal Cliff: A Bipartisan Survival Plan
December 6, 2012
Public Policy | U.S. Economy
Publisher: Milken Institute

How about some backup plans in case Congress fails to reach an agreement on the fiscal cliff, mere days away?

Obviously, the U.S. fiscal position is unsustainable. A political bargain that turns off the higher taxes and lower spending triggered by the deadline -- kicking the can down the road -- would delay addressing the longer term challenge of sustainability. At the same time, the economic recovery remains fragile, meaning that reform must be gradual to avoid inadvertently undercutting growth. The authors believe fiscal policy must operate with two horizons, allowing for near-term support while putting in place a credible approach to addressing the long-term imbalance over time.

The fiscal cliff provides an opportunity to make progress on the challenges of both horizons. Going over the cliff is no one's first choice, but doing so moves the federal budget toward a sustainable path, although with taxes and spending that are unsatisfactory to all. This gives policymakers the opportunity and the incentive to make future changes. One key will be putting a cushion in place to protect the economy from its fall off the cliff.

Then opportunity comes in the form of fiscal room to maneuver. Going over the cliff gives policymakers on both sides considerable motivation to reach common ground on taxes and spending. See specific recommendations for handling the cliff and moving forward.

Search All Publications
Paper or pixels?
2 ways to subscribe to
the Milken Institute Review
Download the app for
iPhone, iPad and Kindle

Buy new digital editions of our quarterly economics journal for $1.99, purchase back issues for 99 cents or get a year's subscription for $5.99. Access links to related video and other content.
Order a 1-year subscription
Receive hard copies for $59, a small price to pay for our edgy, accessible and expert take on the latest in economics.
Subscribe Now
About Us
  Download Annual Report
  Our Team



  Global Conference
  Partnering for Cures
  State of the State
  Asia / California / London
  Young Leaders

  Latest News
  News Videos
  Press Releases

    Financial Markets
    Israel Center
    Public Health


  Financial Innovations Labs
  Milken Institute Review
   Amazon Apps
   App Store
  Research Reports
  Search All Publications
Support MI
  Strategic Partners

Follow Us
  iTunes U

Related Sites
  Partnering For Cures
  Celebration of Science
  Chairman's Corner
  Melanoma Research Alliance

©2014 Milken Institute