Log in

No account? Create an account

Fiscal cliffs

So we've got a bunch of laws due to expire on Dec. 31, most notably a bunch of tax cuts and the farm bill. The stock market and many experts seem to think we're going to drive straight off that cliff because Congress is incapable of compromise.

I'm not sure. Maybe it's the generally euphoric mood I was in after this morning's political news, but it seems to me we're in nearly the best-case scenario for making some legislative progress before the end of the year. If one party or the other had made dramatic gains in the election, that party would be inclined to sit on its hands until the next Congress is seated in January, because they'll be in a stronger negotiating position then. But there are no dramatic gains: the Democrats seem to have gained 1 seat in the Senate, and a handful in the House, but not enough to substantially change the dynamic in either house. So one big incentive to stall is absent.

Another incentive to stall, for the Republicans for the last couple of years, has been "we don't want the economy to succeed, for fear Obama will get the credit for it and be re-elected." Now he has been re-elected, and he won't be running again, so members of Congress may be more concerned with their re-elections than the President's.

In other words, I'm guessing that there will be a compromise on the budget before the end of the year. There will be some tax increases, and some spending cuts, but not enough of either to strangle the economy.