Abrupt Transition

One day it was all about momentum and battleground states (but like dominoes they fell for Obama), abruptly we are supposed to be terrified—by the Fiscal Cliff. So just what is it—and how big?

This Ogre has four components. Those, and the estimated of the impact of each, are shown in the following tabulation:

Fiscal Cliff Components and impacts, in $ bill. Bush tax cut roll-back 280 Payroll tax cut roll-backs 125 Emergency unemployment benefit termination 40 Budget Control Act spending cut mandates 98 Total Impact 543 As percent of GDP 3.4

The impact estimates come from the Wall Street Journal (May 16, 2012) citing J.P. Morgan economist Michael Feroli. In current journalistic rounding, I find some putting it at anywhere between $560 to $600 billion. Whatever. The total amounts to 3.4 percent of GDP, and one way to view that is to apply it to one’s own personal income. If that income is, say $45,000, a 3.4 percent cut would translate to about $129 per month. Okay. Ouch. But a fiscal cliff it is not.

Nor is it likely to take place as currently projected. What the abrupt transition from Election Hype to Fiscal Cliff Hype indicates, however, is that the media exist by promoting great clouds of anxiety. We must seamlessly move from one to another. Therefore, predictably…

But as the election itself refreshingly revealed, the people collectively have some sense. I say that after every national election whether the people I supported win or lose. Therefore the Fiscal Cliff will not cause a collective epileptic fit—except among the pundits.