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Cliffs, Compromise and Consequences

Posted: December 16, 2012 - 12:01am

With all the ‘fiscal cliff’ drama going on in D.C., I have been thinking about cliffs lately. In fact, the last time I thought about ‘cliffs’ this much was when Thelma and Louise drove off the cliff in that classic scene of defiance at the end of the movie. But the difference between these cliff imageries is that the ‘fiscal cliff’ is of our own making. It can be undone.

While the key is applying the brakes – finding the deal - well in advance of the cliff, the path to undoing the cliff is compromise. And here is some good news. All this media attention on the fiscal cliff issue, along with the 2012 election, has resulted in a significant shift in attitude favoring compromise. For the first time, according to NBC news, 59 percent of Republicans say they want their leaders to make compromises to gain consensus in the current budget debate. Previously, in 2011, majorities of Republicans said they wanted the opposite. They preferred their leaders stick to their guns on budget issues and as such this is notable turnaround.

Now, according to the latest national NBC News/Wall Street Journal poll, 65 percent of Americans say congressional leaders should make compromises to deal with the budget deficit, even if that means Democrats would need to accept targeted spending cuts to Social Security and Medicare, and that Republicans would need to accept targeted increases in tax rates. Additionally a new poll by Pew Research Center for the People and the Press finds that even more Americans are willing to walk their talk about compromise. For instance, 74 percent of Americans now say they advocate for a balanced approach that combines spending cuts with tax revenue increases.

Even some Tea Party types are trying to ride this growing desire for compromise. For example, Sal Russo, a co-founder of one of the nation’s biggest Tea Party groups, the Tea Party Express, says “We’re not adverse to compromise, and you’ve got to have the votes. And let’s face it, conservatives don’t have the votes in the Senate, and we don’t have the vote in the White House.” These poll numbers, along with ‘reality check’ comments by Tea Partiers, suggest that compromise is no longer a dirty word. Instead, in the case of the looming fiscal cliff it is a strongly desired outcome.

Now if only President Obama and House Speaker Boehner could apply the brakes in advance of skidding off the cliff. In the movie, Thelma and Louise, it didn’t matter if they applied the brakes. Here it does.

The Congressional Budget Office estimates that the sudden reduction in government spending, triggered by the fiscal cliff situation, will likely lead to a recession in early 2013. Economists on both sides of the political spectrum agree that this is the last thing a barely recovering economy needs.

In regards to the impacts on individual state economies the outcome is more nuanced as it depends on how much each state’s gross domestic product is tied to the federal government. States that have a disproportionately high economic reliance on federal spending, i.e. Alaska will get hit the hardest if the fiscal cliff is not averted. According to the Pew Center of the States, over 16 percent of Alaska’s Gross Domestic Product comes from federal spending on procurement, salaries and wages with another 10.5 percent of our Gross Domestic Product coming from federal defense spending. This means that over 26 percent of our state’s economy is tied to federal spending (national average is 10.6 percent); making Alaska one of the most vulnerable states to a failed a deal on the fiscal cliff.

Will the deal come together? It may not be the comprehensive, balanced solution, but I remain hopeful for at least a temporary solution because not only has the nation’s mood swung favorably toward compromise but the stakes are too high even for traditional political games.

• Troll is a long-time Alaskan with more than 22 years of experience in fisheries, coastal policy and energy policy. She resides in Douglas.

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