We go over the fiscal cliff come 12:00.01 am. We can deal with a fiscal cliff through many ways, including absorbing a short-term recession or retroactively apply a fiscal cliff deal in the new year that would restore any cuts / funds.
We hit the debt ceiling at some point in the next three months, depending upon how long the US Treasury can move money around or delay payments. The sort of long-term cuts that both sides have been talking about on the fiscal cliff, is what will be cut over the next year. This is what the Tea Party Republicans have advocated for; it's a de facto Balanced Budget Amendment that nearly all Republicans have lobbied for (including Paul Ryan and John Boehner), and it's exactly what we'll get to experience in 2013.
If you believe what Republicans have told you -- that a Balanced Budget Amendment would improve growth -- then once again we've set up the perfect experiment in macroeconomic policy to allow you to see if your beliefs are correct. The House and Senate should take up / down votes on increasing the debt ceiling, NOW. That way, we'll record exactly where each politician stands on the issue of the debt ceiling.
A month (or sooner if massive protests explode across the country) after the debt ceiling has been hit and the government has issued worker furloughs, entire departments are closed and the economy has collapsed, we'll take another straight up / down vote on raising the debt ceiling.
I call it the plan to crush this issue (the debt ceiling), once and for all, and to squeeze the Tea Party out of the GOP.
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