The latest trend in Fiscal Cliff analysis is to point out that it's not actually a cliff at all.* Some say it's really a slope or even a staircase. Obstacle course might be more accurate, but that just sounds dumb. Others have suggested that it's more like a waterfall, which is really just a cliff with water. Maybe it's a water slide (a slope with water.) Rex Nutting of Marketwatch says it's neither of those things: It's a bathtub that will slowly overflow and drown us all. Feel better?
The point is that we may be able to agree what it is, but no one can tell what it will do—to us or the economy. People love the cliff metaphor, because it sounds scary and that's the whole point. But they also hate the cliff metaphor because it's not technically correct. Falling off a cliff is irreversible and deadly. This "cliff" might just be mildly annoying for awhile and then we fix it. Some people even think we should purposefully jump off. At least then we'll know what's at the bottom. On the other hand, it could be so terrible that merely looking over the edge is too dangerous to contemplate and waiting until the last second means it is already too late.
What ever does happen people are at least starting to understand that our tax system is seriously screwy. Today's Worst Thing Ever in History scenario is what happens if the changes to the Alternative Minimum Tax come to pass, because that will definitely destroy us all if we let it. The AMT is so bad that if Congress doesn't fix it by year's end, not only will millions of Americans have to pay more in taxes, they won't even be able to file next year, because the IRS can't tell them how. (The AMT has actually been broken for years, but Congress always does a "patch" each year to fix. Not this time.) Maybe that's more like cliff jumping, but without a parachute?
And all of this chaos is just fine with the nation's CEOs who wouldn't mind paying a little more in taxes if it means their corporation's IRS bill goes down. Funny how that works out.
*In case you're wondering, it was Fed chairman Ben Bernanke who coined the phrase during a speech back in February. If you don't like the term, take it up with him.
Image by John David Bigl III via Shutterstock
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