Fiscal cliff: Go over it and add stimulus, says Brookings’ Gale

As the debate over the so-called fiscal cliff and its potential effects continues in policy and political circles, it just may be the case that the U.S. economy will be set on a better path, says Brookings Institution senior fellow William Gale.

“Going over the cliff would give lawmakers both the opportunity to enact a budget deal because they would have more revenues and less spending already in the baseline and it gives them the incentive to enact a budget deal because they won’t like the structure of taxes and they won’t like the structure of spending,” says Gale.

And for good measure, tie in a temporary fiscal stimulus, he says. Enacting a payroll tax cut or government spending on infrastructure will have a stronger impact on the economy than the Bush tax cuts, Gale argues.

“What I would like to see us do is combine a temporary fiscal stimulus with the idea that we go over the fiscal cliff and let the Bush tax cuts expire,” he says.

Allen McDuffee writes about politics and policy and covered think tanks for The Washington Post from 2011 to 2013. He blogs and hosts a podcast at governmentality.net and is currently working on a book about the influence of think tanks in Washington.

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