Three professors gave their opinion of the "fiscal cliff," which dominates current news now that the national elections are over. With the Senate and the House reconvening and the President re-elected, a deadline is fast approaching and this topic is receiving big media attention. Professors Grover, Kessel and Walsh, each stated his concise perspective on the subject.
Professor Grover's perspective:
"The idea that the budget deficit is the number one problem facing the U.S. would be laughable if it weren’t so sad, and so potentially damaging to the vast majority of Americans. All you need to do to believe in this myth is ignore the economic theory, and common sense observations, since the late 1920s. Of course, the fetish of the deficit is not about economics; it's about politics, and a particularly insidious brand of politics at that. That a disturbing number of Democrats have subscribed to this deficit fetish as part of their policy agenda speaks volumes about the outcome of the 2012 elections. In many ways that count, the Republicans won the election by framing the debate. The rest is details: How best can we implement a neoliberal outlook? We're all Greece now."
William Grover, Ph.D., Professor of Political Science, an expert in American politics and political institutions, and APSA Congressional Fellow who worked as a legislative aid in the Office of then-Representative, Bernie Sanders, is the author of Voices of Dissent: Critical Readings in American Politics and The President as Prisoner: A Structural Critique of the Carter and Reagan Years, (1989, 3rd printing, 1992).( One of the Outstanding Academic Books on U.S. Politics by Choice Magazine, 1991.)
Professor Kessel assessed the situation this way:
"While our national debt as a percent of GDP is quite high (just over 100%), low and stable interest rates have reduced the burden of the debt substantially. Congress overreacted by initially refusing to raise the debt ceiling and then failing to reach an agreement over the debt with the President, they just deciding to kick the "can" down the road and deal with the problem after the election. So now we have put ourselves into a mindless straight jacket constraining fiscal policy, requiring significant tax increases and severe budget cutbacks, the complete opposite policy of what we need during a slow paced recovery. It's like the Congress wanted to let a non-human policy tsar, like a Hal from 2001, manage economic policy." It was John Maynard Keynes, one of the great thinkers of the last century who warned us many years ago that, The boom, not the slump, is the right time for austerity.
Herbert Kessel, Ph.D., Professor of Economics, Professor Kessel, a labor economist, has been tracking changes in the quality of life of Vermonters for over 20 years and is the co-author of a number of research studies, each entitled, "The Pulse of Vermont." He is also the co-author of Vermont in Transition: A Summary of Social, Economic and Environmental Trends and has written a number of research studies of the effectiveness of Vermont-based employment and training programs.
Professor Walsh's take on the Fiscal Crisis:
"A responsible approach would be to allow the Bush tax cuts to expire for middle-class Americans, while allowing tax rates to rise on the wealthy. Congress should also raise more tax revenue by closing tax loopholes, which cost around $200 billion in lost revenue per year. Then, instead of massive across-the board spending cuts, they should focus on reforming entitlement programs like Medicare and Medicaid that are actually driving the growth in spending. This approach would put the budget on a sustainable long-term path, without killing the economy in the short run."
Patrick Walsh, Ph.D., Associate Professor of Economics, is the author of "Effects of school choice on the margin: The cream is already skimmed" in Economics of Education Review (July 2008). He teaches Economics of Health Care, Principles of Macroeconomics, Principles of Microeconomics, Public Finance.