Testimony on the Fiscal Cliff
Kevin A. Hassett | Testimony before the Joint Economic Committee
December 06, 2012

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Chairman Casey, Vice Chairman Brady, and Members of the Committee, thank you for inviting me to appear today to discuss the effects of the fiscal cliff on the economy.

The “fiscal cliff,” that is, the combination of automatic spending cuts and the end of multiple temporary tax cuts scheduled to expire at the end of this year, is estimated by the CBO to reduce the federal deficit in fiscal year 2013 by around $607 billion, or $560 billion after taking into account its effect on the overall economy1. Around two thirds of the $607 billion in savings stem from four tax increases that are scheduled to take place in 2013.

This dramatic budgetary shift would, of course, have a very large impact on the overall economy. In this testimony, I examine the potential short and long term effects of failing to address the fiscal cliff, and then relate lessons from the economics literature on the likely impact of various policy responses to the coming deadline.

Click here to read the full testimony as a PDF.

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About the Author

 

Kevin A.
Hassett
  • Before joining AEI, Mr. Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at the Graduate School of Business of Columbia University, as well as a policy consultant to the Treasury Department during the George H. W. Bush and Clinton administrations. He served as an economic adviser to the George W. Bush 2004 presidential campaign, chief economic adviser to Senator John McCain during the 2000 presidential primaries, senior economic adviser to the McCain 2008 presidential campaign, and economic adviser to the Mitt Romney 2012 presidential campaign.   Mr. Hassett is a columnist for National Review.

  • Phone: 202-862-7157
    Email: khassett@aei.org

  • Assistant Info

    Name: Emma Bennett
    Phone: 202-862-5862
    Email: emma.bennett@aei.org
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