Return to story

Fiscally, it's kind of scary, but it really isn't a cliff

December 9, 2012 12:11 am

IN THE BATTLE for hearts and minds, words are powerful weapons.

If you want to balance the budget by cutting benefits, don't say you're going to reduce Social Security or Medicare. Say you're going after "entitlements." Entitlement, according to Webster's: Something to which a person is entitled.

Still, if you curl your lip just right when you say it, you can make it sound as if expecting a return on all the money that's been taken out of a lifetime of paychecks is panhandling.

If you're on one side of the abortion issue, you're pro-choice and the opposition is anti-choice. If you're on the other side, you're pro-life and the other guys are anti-life.

Which brings us to the fiscal cliff. (Don't stand too close.)

Federal Reserve Chairman Ben Bernanke supposedly coined the phrase back in February, and it's grabbed us with its imagery of our whole economy--if not our whole country--falling into a Grand Canyon of debt and despair.

There's no doubt that the present battle of the hardheads in Washington is serious. If Congress doesn't reach a tax and spending agreement by the end of the year, the stock market probably will take at least a short-term swan dive and employment will be affected.

But it won't be a cliff, with our economy plummeting like Wile E. Coyote, making a little dust cloud when it crashes far below.

It's more apt to say we'll be at the fiscal summit of a second-rate foothill with a very gradual decline on the other side, and, unlike Thelma and Louise, we'll be firmly connected to the ground, in a car with working brakes, should we choose to apply them on, say, Jan. 4.

Try inflaming the multitudes with that image, though.

The immediate risk was greater last year, when the Democrats and Republicans played chicken over the borrowing limit. With that one, a government shutdown was imminent. (It could happen again, by the way, at the end of this month.)

With the fiscal cliff, though, either side can blink whenever it wants. Every day after Jan. 1 makes it a little more dire, and the heat will really be on if the Dow drops 400 points on Jan. 2. But the parties involved can stop the bleeding at any time. It will take months for the impact of inaction to take full effect.

This is comforting--and worrisome. If both sides know that Jan. 1 really isn't the date on which Armageddon may happen, then the pressure to defy the odds and actually do something is diminished.

It's hard to know which is worse: Having our leaders take us right to (or over) the edge of the abyss or watching them continue to bluff and dawdle, knowing that the catastrophe is artificial and our demise can be treated as a downhill glide instead of a screaming free fall.

Business Editor Howard Owen writes this biweekly column on business and the economy. He can be reached at 540/374-5539 or howen@free lancestar.com.