Robert Murphy calls himself an anarcho-capitalist which is shorthand for a free market supporter in all things. He is preparing a long article on the impact on government finances if the fiscal cliff is allowed to happen. He gives us a sneak preview of what he has discovered.
He started out using the numbers from the Congressional Budget Office (CBO). That’s as good a place to start despite it being a government agency using government numbers. It doesn’t seem to have a hidden agenda. It just uses the best numbers it can find, and is considered by both sides of the aisle to be fairly accurate. Here’s this from his sneak preview:
Parsing the numbers tells you all you need to know: revenues to the government go up by nearly $500 billion, while government spending is cut – ready? – by $9 billion.
But the deficit is cut nearly in half. As Murphy writes:
In summary, if we go over the “cliff,” the government plans on sharply reducing the budget deficit compared to its 2012 level. Of this $487 billion reduction in the federal budget deficit, the savings will come through two mechanisms:
==> A cut of $9 billion in government spending (1.8% of the deficit reduction), and
==> An increase of $478 billion in tax receipts (98.2% of the deficit reduction).