'Fiscal Cliff' Deniers Doubt World Will End If Talks Fail

Skeptics tout the upside of falling over the so-called fiscal cliff.

December 21, 2012, 9:04 AM

Dec. 22, 2012 -- Not everyone thinks the "fiscal cliff" is so bad.

If the Dec. 31 deadline passes, income taxes will go up and across-the-board spending cuts will hit government programs. But while most of the political world frets as if a major disaster is looming, others have treated it more like the Y2K bug: a fiscal canard ginning up a lot of unnecessary panic.

The cliff is a "fantasy," former House speaker Newt Gingrich told a sold-out crowd at the Ronald Reagan library in Simi Valley, Calif., a week before Election Day.

"It is an excuse to panic," Gingrich said. "It is a device to get all of us running down the road so we accept whatever Obama wants, because otherwise we will have failed the fiscal cliff, and how can you be a patriot if you don't do what the fiscal cliff requires?"

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The former speaker wanted Republicans to stop negotiating with President Obama, for fear of giving too much away. "Back out of all of this negotiating with Obama," Gingrich publicly advised House Republicans. "The president is overwhelmingly dominant in the news media" but, at the opposite end of the political spectrum, liberals have said the same thing for a similar reason.

While the "cliff" would mean higher taxes on the middle class, it would also mean higher taxes on the wealthy, a chief demand for liberals. Automatic budget cuts would hit defense programs, which liberals have wanted to cut anyway, but not the Medicare and Social Security entitlements that Democrats and progressives want so badly to protect.

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Van Jones, the environmental activist and resigned White House green jobs "czar," sought to quiet the "fiscal cliff" alarms Election Night on CNN. "The problem with the label 'the cliff' is that it creates a mindset that there is nothing worse that this set of cuts, and there are things that are worse," Jones said.

"We cannot be in a situation where we get bullied or stampeded into putting in a deal that's even worse than what the fiscal cliff is about."

Jones later wrote on his blog that the "fiscal cliff" is actually a "fiscal bluff": "The so-called fiscal cliff is actually a fiscal bluff --- a made-up crisis to make us think our government is out of money and time. Congress continues to drag its feet over raising taxes on the wealthiest Americans, despite the top 1% earning 23% of the nation's income, and insists on calling for cuts to vital programs instead of reining in massive subsidies ($100 billion in 2011 alone) to major corporations that already make billions in profits.

"America isn't broke --- it's being robbed.Gingrich and Jones started the conversation, but as the deadline creeps closer, others are finishing it."

To some, the "fiscal cliff" offers a clearer upside.

"Democratic and progressive leverage goes immensely up if we get past the beginning of the year," Adam Green of the Progressive Change Campaign Committee told ABC News. "Once they have to proactively lower taxes on the rich, it makes it harder and harder to move that number up and makes it easier and easier to force votes or demand votes on policies that clearly benefit the middle class."

Green says liberals will get what they want immediately, if the Dec. 31 deadline passes without a deal.

"We really want to get past the first of the year so that we have that leverage in the bag," Green told ABC. "It will also show that the fiscal cliff was a myth. If we get into 2013, the really good stuff happens right away, and the really big cuts are a 10-year phase-in."

Green's group isn't the only one that feels this way.

"There's no question that the spending cuts and tax hikes set to be triggered January 1 would harm poor and middle class families, but the radical approach being pushed by Republicans is even worse," MoveOn.org spokesman Nick Berning told ABC News via email.

"Democrats must not agree to the GOP's proposal to cut Social Security benefits through the chained CPI--it would be too harmful to seniors. Democrats including President Obama must stand up for the poor and middle class by standing strong against any Social Security, Medicare, or Medicaid benefit cuts."

On both sides, fiscal brinksmanship has revealed a willingness to reject deals right up until the deadline.

Rep. Tim Huelskamp, R-Kansas, took to a podium outside the Capitol this week to say that Republicans voting for House Speaker John Boehner's "Plan B" proposal deserve to be challenged in primaries. While that's not the same as denying that the "cliff" is so terrible, such resistance to compromise implies a willingness to walk very close to the edge.

After that plan's failure, it appears more likely that the liberal wish will come true, and that conservatives like Huelskamp won't have to explain the drawbacks of compromise to their constituents.

This story has been updated.