Fiscal Cliff: Macroeconomic Consequences of Tax Increases and Spending Cuts.

摘要

A major policy concern for Congress is when and whether to address the fiscal cliff, a set of tax increases and spending cuts that would substantially reduce the deficit in 2013 relative to 2012. According to projections in March 2012 by the Congressional Budget Office (CBO), this fiscal restraint constitutes 5.1% of output in 2013 and is projected to reduce growth to 0.5% from 4.4%. Unemployment would increase by two million. CBOs August 2012 midyear update of economic and budget projections projected growth for 2013 at an even lower level, a negative 0.5%, with a contraction of 2.9% in the first half of the year, which would likely be considered a recession. The unemployment rate would rise to 9.1% by the fourth quarter of 2013. Policy choices with respect to the fiscal cliff are difficult because of the conflict between shortrun and long-run economic and budgetary objectives. In the short run, the reduction in demand from the reduced budget deficit could damage an already fragile recovery. In the longer run, however, deficit reduction is needed to address a projected unsustainable debt level. Aside from these issues of short-run stimulus and long-run deficit reductions, a variety of other issues arise, such as effects of marginal tax rates on behavior and distributional considerations. These issues are acknowledged at the conclusion of the report but are not addressed in detail.