Even without the drag of the cliff, the CBO calculates that the economy will grow an anemic 1.7 percent this year and unemployment will hover around 8 percent. With Europe mired in its own fiscal problems, and the world's other big economy, China, slowing as well, a downturn in the United States could have disastrous global consequences.
"I have to believe that common sense and self-preservation will prevail" in the face of such economic peril, says Maya MacGuineas, president of the Committee for a Responsible Federal Budget and a leading advocate for a grand budget deal styled after the president's debt commission. "It's not going to be easier to fix the problem by putting the country into a recession – quite the opposite."
Because of the impact on pocketbooks.
The tax increases imposed by the cliff on Americans, collectively, would be the highest in six decades as measured by a percentage of the economy. No one who pays income tax would be spared, and many others wouldn't either.
Much of the attention has focused on the expiration of Bush-era tax cuts that would benefit the wealthy. President Obama has indicated he opposes any agreement that would extend tax cuts on those with household incomes above $250,000, while House Speaker John Boehner (R) of Ohio believes allowing higher rates on upper-income Americans would slow job growth. Mr. Boehner has implied that the wealthy could pay more by reducing the tax deductions they receive – but not by increasing their marginal tax rates.