In the last month, we’ve learned a lot about the fiscal cliff. That it’s not as bad as it sounds (it’s a slope, not a precipice.) That negotiations are more complicated than we think. But one question that hasn’t been fully addressed is, why are we calling it a fiscal cliff to begin with?
It all started on February 29th, 2012, when Ben Bernanke warned the House Financial Services Committee that there was a “massive fiscal cliff” in our future. As TIME’s Adam Sorensen reported that day, the language of the usually subdued Fed Chairman seemed to have been inspired by genuine fear that “spending cuts and tax hikes could strangle the recovery in its crib.”
“Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases,” he said in reference to the expiring Bush tax cuts and $1.2 trillion in spending reduction, set in motion by last year’s debt ceiling deal. “I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date.”
Others have since argued that the term “fiscal cliff”—which has now been shortened to simply “the cliff”—is inappropriately geological. Derek Thompson, for example, wrote “It’s the wrong metaphor. There is no ledge. There is no plunge.” Instead, Thompson suggested, we should reach for the more familiar new year’s theme of weight loss and think of the tax hikes and spending cuts as “the mother of all fiscal diet plans.”
So has Bernanke backtracked from his coinage? Not at all. Yesterday at a press conference he reiterated that things would indeed be as dire as he had warned and in fact said that the economy was already suffering because of the stalemate in budget negotiations. And he seemed okay with abandoning the “fiscal” modifier. The way things are going, he said, “I think the economy will go off the cliff.”