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What does the fiscal cliff mean for debt reduction?

12:26 PM, Nov 13, 2012   |    comments
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WASHINGTON, D.C. -- The economists agree that if the country drives off that metaphorical fiscal cliff a recession is soon to follow.

But what if the cliff is avoided by delaying measures to start paying down the estimated $14 trillion national debt?

"The fiscal cliff is a lot of deficit reduction over a short period of time but what we really want is a lot of deficit reduction over a long period of time. If you do it too quickly the economy is harmed tremendously.

"We would fall into a recession during the first half of 2013 and we don't want that because the recovery is happening very slowly, so what we would prefer instead is a longer term deficit reduction because that would help the economy both in the short term and help boost economic growth over the long term," said Joshua Gordon of the non-partisan Concord Coalition.

"The real goal is to slow how much debt we take on, to make sure that we are not taking on more and more debt every year at a faster rate than the economy grows and if we can stabilize that and not take on more debt than the economy growth can keep up with.

We're okay with that stabilization.

"Over the long term you can maybe worry about reducing our level of debt but really what's important is stabilizing it so that it keeps at about the same level as a percent of the economy," Gordon told 9News.

"If the deficit keeps getting larger and our debt keeps growing the way it's projected to under current policies, at some point we will have a major economic crisis because we will not be able to borrow money on the open market, the economy will collapse and it will be even worse than the recession we currently find ourselves in," Gordon said.

Fiscal Cliff coverage: http://www.wkyc.com/money/economy/fiscalcliff/default.aspx

Gannett/WUSA

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