I\u2019m not particularly worried about the budget deficit. In fact, of all the major problems the U.S. faces, I\u2019m least worried about the deficit.<\/p>\n
That\u2019s not because we don\u2019t have to get the problem under control; it\u2019s because I\u2019m pretty sure we will. Why? The budget deficit is unique: If Congress is unable to agree on a remedy, the problem goes away on its own. Would that all of our challenges were so cooperative.<\/p>\n
Federal Reserve Chairman Ben S. Bernanke calls the end of 2012 \u201ca fiscal cliff.\u201d The Bush tax cuts are set to expire. The $1.2 trillion spending sequester, enforcing cuts in the defense and domestic budgets, is set to go off. Various stimulus measures \u2014 including the payroll tax cut \u2014 are scheduled to end. \u201cTaken together,\u201d writes the Committee for a Responsible Federal Budget, \u201cthese policies would reduce ten-year deficits by over $6.8 trillion relative to realistic current policy projections \u2014 enough to put the debt on a sharp downward path.\u201d<\/p>\n
In fact, if Congress gridlocks \u2014 and what does Congress do these days but gridlock? \u2014 we face the prospect of too much deficit reduction too fast. The Congressional Budget Office estimates that barreling over the fiscal cliff would increase unemployment by 1.1 percent in 2013.<\/p>\n