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How to deal with the 'fiscal cliff'?

November 20, 2012|By Pat Benson

The "fiscal cliff" is coming, unless Congress acts soon.

Federal Reserve Chairman Ben S. Bernanke warned Tuesday that President Obama and Congress must act promptly to avoid possibility of plunging the United States into recession again. He said the Fed doesn't have any magic bullets if a compromise isn't found to avoid automatic spending cuts and tax increases starting in January.

Quiz: How much do you know about the 'fiscal cliff'?

Is economic austerity the only answer?

In his next column, Michael Hiltzik examines the idea that the United States can't grow its way out of its deficits -- and finds fault with it.

"The vast bulk of today’s deficits are not structural, but cyclical," he writes, "the result of spending designed to address the financial crisis and the Great Recession, the effects of which are still with us.

"History shows that economic growth can do wonders to reduce government deficits and debt. The national debt as a ratio of GDP peaked at 120% in 1947, reflecting wartime spending. By 1958 that ratio had been cut in half, and by the end of the Sixties by nearly half again.

"Indeed, economic growth in recent quarters already has cut into the deficit as a share of GDP, bringing it down from 10%, the level it reached in the aftermath of the 2008 crash, to about 7% today."

Join us for a live video chat on the fiscal cliff at 2 p.m. Pacific time with Hiltzik, who will be joined by Richard Eskow of the Campaign for America's Future and Alex Lawson of Social Security Works.

Join in on the conversation by leaving your questions or comments below.

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