Washington will not solve the Fiscal Cliff during the lame duck session of Congress. Rather, they’ll pass a stop-gap measure raising the debt ceiling and more importantly giving themselves more time to pass revenue-positive tax reform, consisting of broadening the tax base and lowering marginal tax rates. As now structured the Cliff mixes about $4 in tax hikes for each $1 in spending cuts; minimally, it must be balanced.
Tag Archives: Tax Cuts
Countercyclical Measures
Including the stimulus, tax cuts, bailouts, home and car subsidies and automatic stabilizers (i.e. unemployment insurance and food stamps) the Great Recession will add about $4.2 trillion to the federal debt by the time it ends. The largest contributor; automatic stabilizers. They kick in when the economy slows. These stabilizers will add about $1.9 trillion to the debt by the time the economy is back to normal in 2016.