There Are Worse Fates than Walking off the Fiscal Cliff

If Congress doesn’t act by January 1, 2012, policies will automatically take effect that will reduce the 2013 deficit by $607 billion, or about 4% of GDP. While this policy, commonly referred to as "walking off the fiscal cliff," would be a near-term disaster, an extension of 2012 fiscal policy that fails to address increasing indebtedness could actually represent the worst long-run outcome.