For those of you who don’t know, the U.S. is currently facing what the Congressional Budget Office has determined to be a 1.3 percent Gross Domestic Prouct (GDP) contraction for the first half of 2013 as a result of the so called “fiscal cliff,” a combination of tax increases and spending cuts designed to reduce the deficit.
This contraction would be the textbook definition of a recession (six months of negative GDP growth) and would do a number on our stagnating economy. Republicans and Democrats alike agree that we should avoid driving off the fiscal cliff so these negative effects are avoided, but disagree strongly on how to do it. Here is a three-step solution to avoiding the fiscal cliff and making government make sense. Continue reading