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Fiscal cliff “Cialis plan” deserves firm support
The U.S. Congress seems mighty busy these days. Just last week, it hauled the nation’s top banker in for losing shareholders’ money and voted to hold the attorney general in contempt. So it couldn’t have been easy for Erskine Bowles to galvanize attention from legislators for a considerably more important endeavor.
The former Clinton White House chief of staff, whose name adorns a widely praised roadmap to fix America’s finances, has been circulating a credible contingency plan to address the upcoming fiscal cliff. Expiring tax breaks and spending cuts that kick in from the start of the year could sap $400 billion of disposable income from the economy. Wells Fargo economists predict the measures could plunge America into recession in 2013.
The best solution would be for Congress to work out a comprehensive fiscal bill ahead of the November election. Given the unlikelihood of that happening, Bowles is working on the next-best thing: turning the 65-page report of the National Commission on Fiscal Responsibility he authored with retired Senator Alan Simpson into legislation that can be enacted by a lame-duck Congress.
It would stave off the more draconian elements of the fiscal cliff until, say, July 4 of next year. Importantly, it would provide the framework for a grand bargain between the next Congress and the newly elected president. If crafted correctly, it might even forestall a U.S. credit downgrade.
Bowles met with dozens of legislators last week and plans to submit the scheme to the Congressional Budget Office for scoring. And while there’s probably not enough support yet to ensure passage, Bowles is counting on two powerful forces. The first will be business leaders. The idea is making the rounds on Wall Street and has been praised by BlackRock boss Larry Fink, among others.
The more important force is one that builds as the cliff approaches: fear. Congress may be engaged in partisan political fights today. As the moment of truth nears, however, having a way to combat dysfunction when it’s needed will be critical. It’s not for nothing that Bowles calls it the “Cialis plan.”