An aggressive partisan approach also might not be to Obama’s liking—he seems quite sincerely committed to the ideal of bipartisanship and also to a “grand bargain” on fiscal issues, which might be harder to achieve if he played hardball on taxes. But going over the “cliff” would be a viable course of action—precisely because the cliff is not a cliff at all.
Strategy, gamesmanship, power grabs—these are things that political reporters absolutely love to write about, right? Well, apparently not. Coverage of the issue in leading newspapers in the days since the election has uncritically embraced the “fiscal cliff” metaphor, ignored the key points about leverage, and instead beat the drums for a grand bargain before the New Year.
For instance, in Thursday’s New York Times Jackie Calmes and Peter Baker opened their story with Obama’s efforts to address “the main unfinished business of his term—a major deficit-reduction deal to avert a looming fiscal crisis.” Later, they write:
The efforts from both sides, after a long and exhausting campaign, suggested the urgency of acting in the few weeks before roughly $700 billion in automatic tax increases and across-the-board spending cuts take effect at year’s end — the “fiscal cliff.” A failure to reach agreement could arrest the economic recovery.
Corporate America and financial markets for months have been dreading the prospect of a partisan impasse. Stocks fell on Wednesday, with the Standard & Poor’s 500 Index closing down 2.4 percent. The reasons for the drop were unclear, given that stock futures did not drop significantly on Tuesday night as the election results became clear. Analysts cited fears about the economic impact of such big federal spending cuts and tax increases, but also about new economic troubles in Europe.
“Corporate America”—i.e., the CEOs of major businesses—has been ringing alarm bells about the fiscal cliff for awhile now. The fact that these guys are all in the top income tax bracket could have something to do with that, but that point hasn’t been raised in most coverage.
In Friday’s NYT, Jonathan Weisman took a similar tack, making an interesting choice that subtly communicates the “urgency” of getting a deal done in the lame-duck session: he gave the first quote in his article to a lawmaker who won’t even be in Congress come January:
Senator Olympia J. Snowe, the Maine Republican who will retire at the end of the year, made it clear that she intended to press for a deal to avert the so-called fiscal cliff and get serious on the deficit, lame duck or not.
“The message and signals we send in the coming days could bear serious consequences for this country,” she said. “It could trigger another downgrade. It could trigger a global financial crisis. This is a very consequential moment.”
Times readers, here’s a tip: if you want to know what people on Capitol Hill and in the White House are saying, you’ve got to read the politics pages. But if you want a better handle on the underlying reality of the fiscal situation, search out the bylines, like Lowrey’s, from the paper’s business and economics desk.
Readers of The Wall Street Journal were treated to similar stuff. A “fiscal cliff” headline was bannered across the top of Thursday’s print edition, and the story’s opening contained this passage:
But the pressure is on. Deep, automatic federal-spending cuts and tax increases—a combination widely known as the “fiscal cliff”—will hit in January unless Mr. Obama and Congress agree to some other way to reduce the budget deficit.
Going over the cliff, economists say, would not only risk another recession, but would intensify anxiety about the dysfunction of the U.S. political system. Uncertainty over political turmoil could lead to more turbulence like Wednesday, when the Dow Jones Industrial Average fell 312.95 points, or 2.4%, to 12932.73. That was this year’s largest decline in both points and percentage terms. Asian markets also fell in early trading Thursday, with Tokyo down 1.2% and South Korea down 1.4%.
Online, that was accompanied by a poll in which readers could choose either that “necessary compromises will be made” or that “we’ll go over the cliff.” And just to drive the metaphor home a bit further, the story was accompanied by an explainer video in which economics editor David Wessel literally stands on top of a cliff. (To be fair, the budget explainer in the video is pretty good. And six minutes in, esteemed budget hawk Alice Rivlin acknowledges that it wouldn’t necessarily be an economic catastrophe to go over the cliff—though it would be a “demonstration that there was no hand on the tiller.” But by then, the thrust is clear.)