Next, the so-called Bush tax cuts of 2001 and 2003 were enacted partly as temporary responses to the recession triggered by the collapse of the Internet bubble and the Sept. 11 attacks. The Republican sponsors of the cuts agreed to let them expire at the end of 2010. Then, as that deadline approached, President Obama and Republicans agreed to extend the cuts for two more years, until the end of 2012. Obama campaigned on allowing the cuts to expire only for households earning $250,000 or more, while Republicans advocate making all the Bush income- and estate-tax cuts permanent.
Finally, as part of last year's agreement to raise the federal debt ceiling, Congress pledged to cut spending by $1.2 trillion over 10 years. It agreed that if neither a congressional "supercommittee" nor Congress itself could designate the cuts by the end of 2012, they would happen automatically, divided evenly between defense and non-defense spending. These automatic cuts are known as sequestration.
Federal Reserve Chairman Ben Bernanke coined the worrisome phrase "fiscal cliff" to describe the consequences if Congress fails to act by Dec. 31, allowing all the tax cuts to expire and sequestration to begin. But it's not the worst-case scenario.
It would be worse if Congress extended all the Bush tax cuts and repealed its commitment to cut spending. That would ensure that the government's $1 trillion annual budget deficit would continue to accelerate, and the $16 trillion national debt would continue to expand.
The reality is that it's very difficult for elected officials who want to be reelected to cut spending or raise taxes. But the U.S. government must cut spending and raise taxes to reduce deficits and slow the growth of the debt. It is irresponsible and dangerous to burden future generations with our spending.
It would be nice if Democrats and Republicans could get together and agree on how exactly to reduce spending and raise taxes. But in the current political environment, that is a fantasy.
Anyone who recognizes that should understand that the so-called fiscal cliff isn't so bad. Yes, allowing all the Bush cuts to expire would raise everyone's taxes, but only to the levels of the Clinton administration, when the economy was strong. And, yes, sequestration is a blunt instrument for reducing spending, but there may not be a better way. Does anyone seriously doubt that there is tremendous waste that can be cut from the budget?
There's nothing unavoidable about the fiscal cliff. Congress could act any time before or even after Jan. 1 to fine-tune the mandated spending cuts and tax increases. Republicans deserve both the credit and the blame for giving the Bush tax cuts an expiration date and for requiring spending cuts to raise the debt ceiling. Obama should be willing to allow both to happen if it's the only way to address our growing deficits and debt. And after Jan. 1, he will be in a position to make a better deal than he can now.
And if he can't? Bring on the cliff!
Jan C. Ting is a professor at Temple University's Beasley School of Law. E-mail: email@example.com.