In theory, all of the media hype about how the US will go down into a canyon of flames on January 1 if we hit the Fiscal Cliff should help lawmakers come together to hammer out a deal.
Today’s New York Post cover is an overdramatized version of what most media are doing with their countdown clocks and so forth.
The problem becomes: What happens if there’s no insta-tragedy on January 2, when everyone comes back to work and the market opens?
What if the market doesn’t budge?
What if life for most people seems totally normal?
The problem then is that you have the debt ceiling fight coming up soon thereafter, and there there’s a real likelihood that failure to raise it would result in catastrophe.
Even in 2011, there were a fair number of people who thought that not lifting the debt ceiling wasn’t a big deal, and that everyone was just spinning scare stories. If we go over the Cliff and nothing happens, the sceptics will multiply this time. There’d be no credible pressure from anyone.
This isn’t a first order worry. The big worry is austerity via lower spending and higher taxes. But in terms of addressing a real issue, all this hype isn’t helping.