Economic stimulation and the fiscal cliff

Investments should precede the counterproductive fights on fiscal cliffs and debt ceilings.

Ronald Dixon

Near the end of December, if the Democrats and the Republicans in Congress do not agree on a budgetary plan, the nation is going to enter a “fiscal cliff.” More than a trillion dollars in automatic spending-cuts will be triggered, which would have a horrible impact on the economy.

There is a deeper issue that is plaguing the nation, however. The fiscal cliff may be a short-term dilemma, but the lackluster economic growth that has followed the recovery is, arguably, even worse.

Politicians should be asking themselves what has been done in the past that spurs the economy to the point of growth. If they did that, they would come across the answer of economic stimulation. A majority of economic studies have concluded that the 2009 stimulus package showed a significant, positive effect on the economy.

The stimulus package created and saved millions of jobs, cut taxes for 95 percent of Americans and prevented the economy from diving into a deeper recession. 

Despite the fact that politicians should be looking to avoid long-coming issues, we’re not on the verge of the fiscal cliff. This problem seemingly came from nowhere, appearing in news outlets like some horrible doom awaiting the economy — yet these problems should appear on our radar.

Keeping the Bush tax cuts for most Americans would guarantee that they have more income that would allow them to stay afloat. For the richest Americans — those who are making $250,000 or more — should have their tax rate set at about 40  percent, the same rate that we had it during the relative economic boom of the Clinton years.

President Barack Obama should use his leverage from the 2012 election to pass a fair extension of taxes without entering the fiscal cliff, but he should also focus on real economic stimulation in the long term.