Presidential debates: why $600 billion 'fiscal cliff' was barely mentioned

The third and final presidential debate between President Obama and Mitt Romney in Boca Raton, Fla., on Monday night produced one word that neither candidate had uttered in any of their previous two prime-time tilts: sequester.

The sequester – $109 billion in automatic spending cuts scheduled for Jan. 1 – is only one part of the “fiscal cliff,” a package encompassing more than $600 billion in higher taxes and lower government spending that lands on America’s doorstep in the new year.

Yet the larger "fiscal cliff" issue didn’t get a mention by the presidential contenders or their vice presidential running mates in any of the four debates between the two sides. 

“The silence from both presidential campaigns and the Congress of the United States has been thunderous on this question,” says William Galston, a senior fellow at the Brookings Institution, a Washington think tank. “Nobody wants to talk about it because all of the choices are so difficult.”

On Monday night, the only mention came when Mr. Romney criticized half of the sequester – cuts to defense spending – while Mr. Obama, in a surprise move, simply declared that the sequester "will not happen."

The president's statement appears to undercut what has been a Senate Democratic negotiating strategy: to use the threat of the sequester to leverage concessions from Republicans on raising taxes on Americans with the highest incomes. GOP leaders said they were surprised by the announcement, especially as the president has yet to present a plan to avoid the sequester.

Moreover, the presidential campaign has failed to prepare the American public for tough choices that face the newly elected president and Congress immediately after the Nov. 6 election.

The cliff, a term coined by Federal Reserve Chairman Ben Bernanke, includes the expiration of the Bush-era tax cuts for all Americans, sharply lower payments for health-care providers for Medicare patients, and the sequester, which will indiscriminately slash budgets at the Defense Department and non-defense expenditures like social services and education, among other issues.

That hit, the Congressional Budget Office (CBO) estimates, is likely to send the US economy into a recession. And while Congress may do what it does best – put the issue off for some time before scampering home for Christmas break – that route is fraught with peril from bond-ratings agencies threatening to downgrade America’s credit rating should Washington again cop out of its financial responsibilities.

“There’s really been no discussion of the elephant in the room,” says Marc Goldwein, a senior policy director at the Committee for a Responsible Federal Budget, a nonpartisan group that advocates fiscal responsibility. “I’m not sure [the fiscal cliff is] our biggest threat, but it’s our most immediate threat to the economy.”

That lack of discussion could be troublesome for whichever man is elected on Nov. 6, as weighty choices about taxes and spending must be made quickly – and without laying the groundwork or obtaining a mandate from voters for moving a deal through Congress. 

“Talking about it, you emphasize, ‘It’s really a problem,’ ” says Douglas Holtz-Eakin, a former CBO director and the chief economic policy adviser for Sen. John McCain’s presidential run in 2008. “The American people need to know it’s really a problem.”

Both Romney and Obama have laid out their plans for handling America’s overall debt and deficit in broad terms, including accepting the claim by bipartisan, blue-ribbon panels that the nation needs to trim its debt by some $4 trillion over the next decade.

“At least they are talking about the debt,” says Mr. Goldwein, “and that’s an improvement over any other presidential campaign since the '90s.”

Romney has said he would like Congress to punt all of the fiscal cliff issues into 2013, so that his administration would have responsibility for handling them. Then, he would pair significant spending cuts and entitlement reforms with an overhaul of the federal tax code to bring down rates and curb deductions. That is a tax two-step that Democrats and Republicans believe can spur economic growth, although the parties differ on the extent of its economic impact.

Obama, for his part, has said he wants to deal with the fiscal cliff as part of a larger debt- and deficit-reduction deal of about $4 trillion. He also vows to veto any bill that extends the Bush-era tax cuts for household incomes over $250,000 and wants a roughly 3 to 1 ratio of spending cuts and entitlement reforms to tax increases to reach the $4 trillion target.

Both candidates in Monday's debate charged that the other has an inadequate plan for dealing with debt and deficits. Obama battered Romney with calls to specify what tax breaks he would cut to pay for his plan to reduce tax rates. Romney did not offer further details.

"There’s an inequity of specificity,” Goldwein says. "[Romney] tells us exactly how he’s going to cut taxes ... and then when we ask him how he’s going to pay for, he says, ‘I don’t know.’ "

On the other hand, the president's plan "just barely stabilizes the debt, and in the long run after 2022, the debt rises again,” he adds.

But the real turning point in the debates over the fiscal cliff and the nation’s economic horizon will not be how much specificity the candidates offer on the campaign trail but how much leadership the next president will offer on the issue.

A gridlocked Congress needs presidential-level force, as in President Bill Clinton’s budget deal with Republicans in 1997, to move the ball.

“One of the things that Bill Clinton did very well was he got to yes, he got to the deal, he owned it and he sold it” to the public, says Mr. Holtz-Eakin. “Whether deep in his heart he believed in it, I don’t know. But he sold it.”

The next president will need an informed public to help sell a potential "big" debt and deficit deal, Holtz-Eakin says. “Historically, deficits are always things people talked about but they didn’t change their votes, but now they do,” he adds. “If we are to believe the exit polls in 2010, if we believe what people are saying now, they will change their votes on the basis of spending and debt.”

Polling is sending mixed messages on whether the campaigns are giving voters what they need on the nation’s leading fiscal issues. About 6 in 10 voters say both campaigns “have a message and you know what they would do if elected,” according to an NBC/Wall Street Journal poll released Monday morning.

But that stands in contrast to 74 percent of voters who say neither candidate has done enough to inform the public about his plan for the fiscal cliff, according to a poll released last week by Center Forward, a center-left group.

No matter what, however, “not talking about [the fiscal cliff] isn’t going to make it go away,” Goldwein says. “Regardless of how much or little we talk about it, it’s going to put us into a double-dip recession” if Congress and the White House fail to act.