|Alice Rivlin discusses the “Fiscal Cliff” and the long-term economic outlook for Metropolitan Washington
Alice Rivlin speaking at COG's Annual Meeting on December 12, 2012
Washington, D.C. – Alice Rivlin, a senior economist at the Brookings Institution and an expert on the federal budget, said she believes the President and Congressional leaders will reach an agreement to avoid the mandatory tax and spending cuts known as the Fiscal Cliff. At COG’s Annual Meeting, Rivlin called the budgetary predicament they face an “artificial, elementary problem.” See a video clip of Rivlin's speech below.
“The so-called Fiscal Cliff is a very serious problem, but it’s a totally artificial problem that Congress created – it’s a very clear testament to the fact that our political system isn’t working and we should all express our outrage that it’s come to this,” said Rivlin.
“That said, I don’t think Congress and the President will take the country off the cliff, and if they do, not for very long. However, like when the forecast calls for a major snow storm, we need to be prepared in case it does happen.” To help the region prepare, COG launched its Metropolitan Washington Fiscal Cliff web site today which includes news, resources, and analysis on the regional impact of major changes in federal spending.
Rivlin then proceeded to outline her solution for averting the cliff and improving the country’s long-term fiscal situation. Rivlin recommended Congress raise tax rates while also broadening the tax base by eliminating many deductions and converting others to credits. As for spending cuts, which Rivlin noted are “even harder” to fix than the tax issues, she suggested focusing on reducing the exponential growth in health care spending by changing incentives and reducing benefits for higher-income individuals.
Acknowledging that this major tax and entitlement reform cannot realistically be accomplished in the few weeks remaining before the January 1 deadline, Rivlin suggested Congress and the President pass legislation providing a clear “set of instructions” with specific tax and spending reform targets and tasking the next Congress – “and not another supercommittee” – to come up with the details by next summer. Rivlin argued that this would not constitute “kicking the can down the road,” but rather enable time for the creation of a “grand bargain” that both parties can support.
“This region is a great place to be and we’re not going to be derailed!” said Rivlin noting that, “whatever happens on the fiscal cliff, we should all be very glad that we live here” given that metropolitan Washington’s economy has shown itself quick to adapt and, as the nation’s most-educated region, is poised for success in the knowledge economy.
Rivlin also noted that the region’s recent long-term planning efforts have put metropolitan Washington in a great position to continue to thrive. “COG’s major planning efforts, including Region Forward and Economy Forward, represent serious forward thinking and will pay off,” said Rivlin. “They’re helping make metropolitan Washington a model region for the nation.”
COG is an independent, nonprofit association where area leaders address regional issues affecting the District of Columbia, suburban Maryland and Northern Virginia.
One Region Moving Forward
Release Date: Dec 12, 2012
Contact: Lewis Miller