I think most people have “the fiscal cliff” confused with the debt ceiling crisis. Really, they’re opposites. Not raising the debt ceiling means not paying our debts. Going off the fiscal cliff means paying off our debt by raising taxes and cutting government spending. Well-advertised is the CBO saying going off the cliff could lead to a recession next year. Less advertised is that it also says it could get us into a more sound fiscal position in the long-term.
All this fiscal cliff panic is just proof that we are all Keynesians. Everybody knows that more government spending — whether it’s in the form of tax expenditures or social services, helps the economy grow. But you have to balance that with not letting your budget get out of hand.
Since we’re looking for new revenue streams that aren’t income taxes, Obama should use this budget crisis — if you can call it that — to do something about global warming with a carbon tax. This may be his last and only chance to do something big since cap and trade didn’t work. And it would be just desserts for the oil and coal industries that went all in for Mitt Romney, a nice little personal fuck you to the Koch brothers.