The REAL Reason Corporate Executives Are Freaking Out About The Fiscal Cliff

Panic over the fiscal cliff is so widespread, one might forget why people are panicking about it.
After all, the fiscal cliff is a major deficit reduction event, and reducing the deficit is a very popular idea. Why not just hit it?
In a must-read post at New York Magazine (via Bonnie Kavoussi), Jonathan Chait clarifies a lot: The Fiscal Cliff is an event that plays very much into the hands of Democrats, or at least those with a liberal agenda, because it reduces the deficit in ways that conservatives and corporations don't like: Higher taxes and lower defense spending.
Chait writes:

Republicans hate the fiscal cliff because it eliminates the deficit in ways they hate — mostly by ending all of the Bush tax cuts, along with some spending cuts that take a huge bite out of the Pentagon. But another group also hates the fiscal cliff for different reasons. The centrist anti-deficit groups funded by Pete Peterson hate the fiscal cliff because it creates an avenue for bringing revenue and outlays in line in a way that they don’t want. It basically creates a situation where the deficit is solved in ways that are more left-wing than even Obama proposes, giving him leverage to craft a solution largely along his own preferred lines, rather than through the “grand bargain” they have been fruitlessly trying to craft since 2010. And so they are issuing dire warnings about the fiscal cliff that are either completely disingenuous or reveal a total failure to understand what they’re complaining about.

He goes on to note that Wall Street execs have signed onto a letter claiming that if the cliff is hit, America will get another downgrade, and that interest rates will spike, which is completely disingenuous. Everyone who saw the first downgrade knows it did nothing to push rates higher.

Read more: http://www.businessinsider.com/why-corporate-america-is-freaking-out-about-the-fiscal-cliff-2012-10#ixzz29vnUhDQ5