Kevin Glass
The Congressional Budget Office released their analysis of the group of deficit-fighting policies known as the "fiscal cliff." The big takeaway: completely averting the contraction that would occur in 2013 and 2014 would cost $1.16 trillion - entirely deficit-financed.

There would certainly be some economic benefits to all of this, however. The CBO has a wide range of estimates for the positives - between 0.8% and 5% growth in real GDP, and between 1.1 million and 5.8 million new jobs. There are a lot of caveats here, as it's an incredibly wide range of estimates, but there would certainly be a definite economic upside to averting the fiscal cliff.

However, what the CBO does emphasize is that there will be grave and dire consequences to merely fixing the fiscal cliff without offsets down the road.

Although reducing the fiscal tightening scheduled to occur next year would boost output and employment in the short run, doing so without imposing a comparable amount of additional tightening in future years would reduce the nation's output and income in the longer run relative to what would occur if the scheduled tightening remained in place. If all the policies considered in this analysis were extended for a prolonged period beyond the two years assumed here, federal debt held by the public - which is currently more than 70 percent of GDP, its highest water mark since 1950 - would continue to rise much faster than GDP. Such a path for federal debt could not be sustained indefinitely, so policy changes would be required... Ultimately, the policies assumed in the alternative fiscal scenario would lead to unsustainable federal debt, from both an economic and budgetary perspective.

Given the language coming out of Congress, the White House and the punditocracy, however, it is seeming less likely that legislation will be passed that simply kicks the can down the road and delays the full suite of policies scheduled to take effect. There are a lot of moving parts involved, and it's important to acknowledge which policies will and won't be valuable to the economy.

Kevin Glass

Kevin Glass is Director of Policy and Outreach at the Franklin Center for Government and Public Integrity