A Proposal for Working Through Fiscal Obstacle Course

Our recent issue brief, A Fiscal Obstacle Course, Not a Cliff (Bivens and Fieldhouse 2012a), provided policymakers and other interested parties with information on the budgetary and economic impact of each major component of the so-called fiscal cliff. Because the fiscal cliff is actually composed of a number of completely separable policy changes, we also suggested a better metaphor: the “fiscal obstacle course,” with the obstacles in question impeding, to varying degrees, faster economic recovery and lower unemployment. Our paper presented an “à la carte menu” of major provisions and their impacts, which demonstrated that some policies looming large in budgetary terms would actually exert a minimal drag on economic growth if allowed to expire (e.g., the Bush-era tax cuts for upper-income households). Conversely, some policies that are relatively inexpensive in budgetary terms would provide a substantial drag on growth and jobs in the coming year if allowed to expire (e.g., the Emergency Unemployment Compensation program).