A note from the lunatic fringe

Eli,

Count me as part of the lunatic fringe. I guess I'm also one of the bugs crawling around.

What evidence or analysis can you provide that says the economy will be damaged more by doing nothing (the cliff) versus doing something, Plan A, Plan B etc.?

You would have to argue businesses and consumers have made the assumption Congress and the President have some magic potion to solve all ailments and have set their plans accordingly. In that scenario going over the cliff makes those assumptions false and therefore spending and investment decisions will change substantially. I find that line of thinking difficult to believe. Alternatively you can argue businesses and consumers have made *no* plans and going over the cliff results in lower activity. But that is also hard to believe. Plus, as we know government programs are filled with perverse incentives. Going over the cliff may stop some of those incentives and result in a better outcome. So even if no plans have been made, the new plans can be better not worse for the economy.

As far as the President's spending "cuts," I, like my fellow lunatic fringers, don't believe there are cuts or "cuts."

The cliff provides a way to balance cuts and taxes on a road to fiscal sanity. The result is exactly what you have been looking for. Well, you got it. I wouldn't choose this set of cuts and taxes, but it's better than Plan A or Plan B.

Bill