Are We Headed Over the Fiscal Cliff?

An election non-issue threatens long-term U.S. economic health.

The so-called "fiscal cliff" is the topic of conversation between President Obama and labor leaders this week.
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The debt-ceiling debacle has striking resemblances to the ongoing fight over the fiscal cliff. Lawmakers were aware of the dire consequences of not increasing the country's debt limit for months prior to the showdown. An agreement to increase the limit was supposedly in place in the weeks before the credit extension deadline. However, at the last minute, Tea Party Republicans in the House of Representatives backed out.

The country's credit limit was eventually extended. But the partisan politics that nearly made the United States unable to pay its bills prompted ratings agency Standard & Poor's to downgrade U.S. credit for the first time in history—leading to the most volatile week in world markets since the 2008 financial crisis.

Naroff and Tignanelli say they fear a similar scenario could play out as fiscal cliff negotiations proceed. "If I'm a business [owner] thinking of hiring or investing, my reaction would be, 'If they drive the national vehicle off the cliff, then we're in trouble,'" Naroff says. "'If I don't have to hire right now, I won't.'"

Politicians "have surprised me with their stupidity," adds Tignanelli. "Nothing they do would surprise me right now."