Foreign Affairs
December 11, 2012
Efforts to address the "fiscal cliff" -- the combination of tax increases and across-the-board spending cuts that will come into effect around the first of the new year if policymakers don't avert them -- should center around two related goals: protect the economic recovery in the short term, and promote growth, opportunity, and shared prosperity in the long term.
The most urgent short-term goal is for the United States to avoid the sizeable risk of returning to recession. If the scheduled tax and spending changes all take effect, and remain in effect for more than a month or so, the sharp fiscal contraction would likely halt the recovery and send the unemployment rate back up. With monthly job creation still sluggish and with long-term joblessness still at record levels, that would be unwise.
In the longer term, the United States must address its deficits and debt, which are on an unsustainable course. It must do so, however, in a way that avoids increasing poverty and hardship and the number of Americans without access to health care, or leaving government unable to meet basic responsibilities at home and abroad.
In less than a generation, we have witnessed a tect