With Fiscal Cliff Averted, Pro-Growth Reforms Needed Now
Technically we went over the fiscal cliff, but it ended up being a semi-soft landing instead of a head-first dive. This is not to say it was a great deal, as the U.S. Chamber President and CEO Tom Donohue explains:
The Congressional Budget Office (CBO) has warned that the tax hikes that will take place will mean slower growth, fewer jobs, and less prosperity for all Americans. And, when it comes to cutting spending and controlling the national debt, this deal does not even begin to address the serious fiscal challenges we face.
This is echoed by others. The Wall Street Journal editorial page wrote, “[T]he higher rates will make the U.S. less competitive and keep growth slower than it might have been.” Michael Feroli, chief U.S. economist at J.P. Morgan Chase said, “What’s not good is that deficits are still going to be large and it doesn’t begin to touch the longer-term horizon.” The Washington Post editorial page also weighs in:
The compromise bill passed by Congress to avert the worst effects of the “fiscal cliff” is a small, imperfect package that will do too little to address the nation’s long-term debt problem.
With sequestration--automatic spending cuts that were scheduled to take effect today but were postponed for two months--and the debt ceiling both requiring congressional action before the end of February, don’t expect the fiscal debate to dissipate. Donohue advises federal leaders that more has to be done:
The new Congress and the administration must begin work immediately to slow runaway spending through structural entitlement reforms. They must also spur faster economic growth through comprehensive tax reform and a rapid expansion of American energy, which would create jobs and generate government revenues. This is the only formula that can reduce budget deficits and control our unsustainable national debt.
Washington has a lot of work ahead.