Why You Should Care About the Fiscal Cliff

The president of the Committee for a Responsible Federal Budget and the head of the non-partisan Campaign to Fix the Debt explains the fiscal cliff and why politicians are still wrangling over it

by Lesley Kennedy • MORE.com Reporter
maya macguineas image
Maya MacGuineas, head of the Campaign to Fix the Debt, says going over the fiscal cliff would be "devastating."
Photograph: Campaign to Fix the Debt

President Obama and Speaker of the House Boehner may be inching closer on a deal to avoid the fiscal cliff, but an greement is no guarantee that all our long-term economic problems will be solved. We asked Maya MacGuineas to lend some insight into how we reached this precarious state and how it will impact each one of us.

As the president of the Committee for a Responsible Federal Budget and the head of the Campaign to Fix the Debt, a non-partisan movement to put America on a better fiscal and economic path, MacGuineas testifies to Congress regularly and is a frequent contributor to both broadcast and print news reports. [The Wall Street Journal once called her an “anti-deficit warrior.’]

We spoke with her about what citizens can do to let lawmakers know their concerns. An edited version of the interview follows.

MORE: We keep hearing “fiscal cliff,” but what, exactly, does that mean?

Maya MacGuineas: The irony of the fiscal cliff is that, for the most part, it was actually created by policymakers to force them to do what they don’t want to do. At end of 2012, all of the 2001, 2003, 2010 tax cuts will expire at the same time something called a sequester hits, which means across-the-board spending cuts from most parts of the budget, and a number of other policies will expire all at once.

What this means is that over the next 10 years, we’ll have removed about $7 trillion from the economy, or that we’ll have so much deficit reduction—and I say this as someone who believes that we desperately need deficit reduction—that it would throw the economy back into a recession.

MORE: Why wasn't this dealt with sooner?

MM: The sequester was the result of the fact that the super committee, a group that was supposed to come up with a bigger budget deal a year ago, failed to get its work done. And so policymakers put the sequester in so that there’d be automatic budgetary savings. Right now, policymakers are trying to figure out how you can change these policies to avoid the fiscal cliff; but you also don’t want to punt, and just wave all the policies and extend the tax cuts, which would add tremendously to our already much too high debt. So they’re struggling to replace the fiscal cliff with some kind of sensible deficit reduction deal.

That’s what they should do, but obviously, it’s hard. It’s filled with all the kinds of policies that politicians don’t like to talk about: raising taxes and cutting spending. That’s why we’re here, hovering on the edge of the fiscal cliff

MORE: How did the Campaign to Fix the Debt come to be?

MM: We work with policymakers on both sides of the aisle, and they kept saying they weren’t hearing enough from business leaders or constituents or civic leaders back at home about how important it was to address the deficit and debt. They weren’t sure if people cared. From our work of talking with these constituencies, we know people really do care, and we wanted to create a different kind of campaign.

We wanted to create something that was going to focus on the fact that citizens are actually aware that we have to make these hard choices—because they understand it’s critically important for the country. So, we put together an incredibly diverse coalition of over 300,000 citizens, we have operations in 17 different states and are growing, we have over 2,500 business leaders, well over 100 CEOS, many former members of Congress, civic leaders and youth all trying to build a campaign. We want to strengthen the economy and leave this country better off for the next generation. It’s the opposite of most lobbying campaigns. It’s really not about the normal special interests who come to Washington; it’s about the national interest.

MORE: Why haven’t the Republicans and Democrats been able to come up with a solution? Is it just politics?

MM: One part of it is politics. You haven’t seen a lot of working together recently. Two, it’s really hard. In this country, we have been borrowing beyond our means for decades. Undoing that means doing all the difficult policies—raising revenue, cutting spending, reforming entitlement programs—things that can be done in a smart and thoughtful way, but they’re still politically difficult. And third, until recently, I don’t think the public understood how important (dealing with the nation’s debt) is. … Until recently, I think deficits were really just a confusing and removed issue. Now I think people can see that it’s different, but not all that different, from a household. You can’t borrow beyond your means with no plans to repay it indefinitely.

MORE: Do you think an agreement will be reached?

MM: The mood changes so regularly, it’s very hard to see behind the curtain here. We’re talking with everybody on all sides, and I truly believe they care about getting a deal and they understand how important it is for the country. I think we won’t go off of the cliff.

MORE: What would going off the fiscal cliff mean to MORE readers?

MM: It’s devastating. Recessions are bad enough, in that they come along in a regular business cycle and hurt people so badly, but for the country to have a self-imposed recession is truly unforgiveable. There are so many jobs that are on the line, that if we were to go off of the cliff and start seeing more joblessness instead of less it would be a devastating set-back. It will have an effect on wages, it will have an effect on the stock market. Basically, we could all become both poorer and more uncertain.

As the chief economist for the White House said, some of the biggest damage would come from the psychological damage that comes from saying our government truly can’t govern.

MORE: What can each of us do?

MM: People should pick up the phone and call their members of Congress and write them letters and say we want you to work together to fix the problems of the deficit and the debt in this country. There’s nothing high-tech or magic about it. Politicians don’t like to do hard things – just like none of us do – so they need to hear that you are watching and that you care.

Next: 11 Last-Minute Tax Moves to Make in 2012

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First Published Fri, 2012-12-14 16:02

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