Ryan Grim has written the best article I have yet read on the Fiscal Cliff, Fiscal Fail: Government Agencies Plan Few Significant Changes For January, Despite Cliff Hype. He starts by explaining what readers of this site already know: nothing happens on 1 January. The stock market won’t freak out. Tax collectors won’t go door to door demanding money. And an asteroid will not collide with the earth. Instead, John Boehner’s caucus will finally see that in fact they had no leverage all along and an agreement will be made to keep tax rates the same on the bottom 98% of tax payers.
I have been wondering how all of this would affect government agencies. In particular, the IRS has to tell businesses how to withhold taxes. And other government agencies need to know what to assume about their budgets. As Grim points out, they are all in agreement: they will proceed assuming that a deal will quickly be worked out:
Similarly, the GAO is looking well into the future:
At first, the only people screaming about the Fiscal Cliff were conservatives who knew that a deal made before the end of the year would be much better for them than one made in the new year. But somehow—probably because there isn’t much else to talk about —the mainstream media have tried to turn these negotiations into a crisis. As Grim points out, however, just like with Y2K, the new year is going to come and everyone will be standing around wondering what was the big deal.