'Cliff' More Like a Garden; DC Is 'Trampling the Lawn': Pro
The dreaded fiscal adjustment Washington lawmakers are scrambling to prevent is less of a "cliff" than a pristine garden that is being stomped on by "unwanted visitors," an economist told CNBC's "Squawk Box" on Monday.
As warnings about the "fiscal cliff" continue from Wall Street, Corporate America and the Washington political establishment, Jeffrey Cleveland, senior economist at Payden & Rygel, said a slope metaphor "is the wrong way" to view the problem and the solution.
In fact, Cleveland argues, its more like a green space.
"There's no single group at the top that can manage that garden in a top-down fashion," he said. "It's going to be organic, it's going to be bottom-up, and there are things they can do to harm things."
Lawmakers are scrambling to make progress in talks that will avert stiff tax increases and government spending cuts scheduled for Jan. 1. Some prominent politicians are already warning that talks are headed for a breakdown, amid disagreement about how much taxes should be increased, and on whom. (Read More: Fiscal Cliff Talks Stalled, Senator Warns.)
Washington policymakers are "unwanted visitors trampling all over the lawn," Cleveland said. "The real problem from an economic perspective is if you believe in the [cliff] analogy, ... then you think everything that ails the economy is a demand-side problem."
More certainty about taxes would be helpful to allowing business to flourish and entrepreneurs to help create jobs, he said. Cleveland added that any half-measures that delayed a long-term fix "would be the worst scenario because it doesn't eliminate any of the economic policy uncertainty, and every morning you'll be having the same discussion."
Meanwhile, Cleveland said, Congress has failed to address a big part of the source of the federal government's budgetary woes — entitlement spending. "Congress spends all its time tinkering with what to me is maybe one-fifth of federal spending. And a full 63 percent of what they're spending money on is entitlement programs … and they're not even addressing those things."
