What's the Big Idea?
The so-called "fiscal cliff" refers to the expiration of the Bush tax cuts on December 31, 2012, along with a series of spending cuts that will be triggered on that same date. It is called a cliff because the change will not be gradual, but steep and dramatic.
Economists estimate all of the tax and spending measures together will take a total of $500 billion out of the U.S. economy in 2013. That will certainly sting, and many worry it will trigger a double-dip recession. Why are we facing this fiscal cliff? The situation is the result of a compromise plan that President Obama and Congress agreed to last summer that ended the debt ceiling debate, or rather, put it on hold. Meanwhile, organizations such as the IMF have advocated that Congress take a less aggressive approach to debt reduction that would mitigate the short term pain that woud be inflicted on a fragile economy.
Congress has not taken any action.
On the other hand, a growing number of Democrats -- Howard Dean included -- are arguing that we ought to go "over the cliff" as planned. Cut spending and let the tax cuts expire, they argue. This will undoubtably hurt the economy in the short term, but these proponents argue it is necessary to inflict some pain in the short term in order to get our fiscal house in order.
Watch Howard Dean explain his position in a recent interview with Big Think:
What's the Significance?
While the "fiscal cliff" debate has occupied Washington and Wall Street, this extremely significant tax and spending question has not really taken hold with the mainstream population. We expect that all to change. And that is due to Mitt Romney's selection of Paul Ryan as his running mate. Ryan is the architect of the GOP's budget, assuring this issue will play a key role in the contest.
Indeed, the so-called "Ryan plan" has introduced something that seemed to be missing in an election filled with mudslinging and the usual horserace-style analysis: ideas.
Here is one of Ryan's ideas: replace Medicare as it currently exists with a voucher system that will pay individuals to purchase private insurance. Ryan says his plan is designed to save Medicare, not destroy it, as the entitlement is on track to becoming insolvent by 2024. Ryan's plan would enable the government to fix costs. This vital restructuring, Ryan argues, will optimize the system and make it better. The other choice is a future that we know is unsustainable.
There is also a big idea underlying the way Ryan has framed the debate. Is changing the system an act of theft from one group and perpetrated by another -- the "millionaires over Medicare" line the Democrats are using to attack Ryan's plan? Or, as Ryan argues, should we frame the argument around the necessity for cross-generational compromise?
These are big ideas and part of a big debate we look forward to hosting on Big Think this election.
Democrats and Republicans alike both seem primed for a battle over this key issue, introduced by Ryan, hence making the election what pundits call a "choice election" that focuses on competing visions for the future rather than a "referendum election" that centers on President Obama's record.
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