The Fiscal Cliff

Expert sources from America's colleges and universities providing insight and background on the state of the U.S. economy and the fiscal cliff debate.

University of California, Riverside

Marcelle Chauvet
Professor, Department of Economics
University of California, Riverside
Telephone: 951/827-1587
Email: chauvet@ucr.edu

Expertise: Professor Chauvet developed a real-time recession prediction model that is widely popular in the media and business community as well as government. The model is helpful as people try to predict what actions could help or hurt the U.S. economy. The model gives a real time ssessment of the strength or weakness of the economy on a current basis and the results are regularly posted on her webpage:
https://sites.google.com/site/marcellechauvet/probabilities-of-recession

She is consulted frequently by the U.S. government, foreign governments, and the regional and international business community. The probabilities from Chauvet and Piger (2008) are now being posted in the widely accessed FRED database from the Federal Reserve Bank of Saint Louis. http://research.stlouisfed.org/fred2/series/RECPROUSM156N

Here is a short opinion piece in The New York Times:
http://www.faculty.ucr.edu/~chauvet/dice.pdf

A campus profile of her work:
http://promise.ucr.edu/profile-policy-chauvet.html

Bentley University

David Gulley
Professor of Economics
Bentley University
Office: 781/891-2355
Home: 508/748-9760
Email: dgulley@bentley.edu

Expertise: Gulley's areas of expertise include financial economics, monetary economics and macroeconomics. He has presented papers at numerous national and international conferences and his publications have appeared in Economic Inquiry, National Tax Journal, Journal of Macroeconomics, and Applied Financial Economics, among others.

Quoting Gulley: "There is a reasonable chance that the full fiscal cliff (i.e., all of the tax increases and government spending cuts scheduled to occur starting on January 1, 2013) will be avoided by congressional/Presidential action.  However, even if the full fiscal cliff does hit, it is likely that the effects will not be as dramatic as we are being lead to believe, for example, by the Congressional Budget Office.  There are several reasons for this optimism. First, the payroll tax rate cuts have been seen to be temporary in nature. If people did not increase their consumption in response to the tax cuts, this suggests that they may not decrease consumption in response to the tax rates increasing. Second, to the extent that the fiscal cliff reduces government deficits, people may not expect taxes to increase as much in the future. This could work to support consumption and investment spending."

John Tommasi
Senior Lecturer, Economics
Bentley University
Home: 508/748-9760
Cell: 603/490-7893
Email: dgulley@bentley.edu

Expertise: Tommasi's primary research area is macroeconomic effect of fiscal and monetary policy on the economy & stock market. He also examines the impact of fiscal policy on energy prices and the economy. Relevant courses taught include Monetary Theory and Contemporary Issues in Economics. Tommasi has a concentrated area of study in comparing/contrasting the Reagan stimulus of the 80's to the Obama stimulus/social agenda of 2009.

Quoting Tommasi: "In order to avoid the fiscal cliff, both parties must move. Politics is the art of compromise. While the President is adamant about raising taxes on those who make more than $250K/year, in a recent speech he alluded that it didn't have to be to the Clinton rate of 39.6%. An obvious compromise would be 37%. A one trillion dollar deficit is unacceptable.  Spending cuts must be made and much of the inefficiencies in Washington should be addressed; e.g.'s, postal service, Medicare/caid, Department of Education and Defense to mention a few."

Oberlin College

Edward McKelvey
Visiting Professor of Economics
Oberlin College
Telephone: 440/775-8857
Email: ed.mckelvey@oberlin.edu

Expertise:Edward McKelvey teaches courses in macroeconomics, money and banking, and financial derivatives. He previously worked for the Federal Reserve Board research staff in Washington, D.C., where he conducted and later supervised research on inflation, unemployment, nonbank financial institutions, and U.S. capital markets. McKelvey then worked for Fannie Mae, JP Morgan, and Goldman Sachs, where he managed the U.S. economic forecast, served as desk economist for fixed-income sales and trading, and pursued research on consumer behavior, housing activity, U.S. business cycles, monetary and fiscal policy, the federal budget, and Treasury financing.

Quoting McKelvey: "If the economy goes over the fiscal cliff, it will suffer a hit worth about 3.5% of GDP--more than enough to throw it back into recession. Since most policymakers understand this, they will almost certainly figure out some compromise to avert most of the cliff, especially with another debt ceiling looming shortly thereafter. The key questions are (1) whether the compromise is large enough to avert an economic downturn (most likely yes) and (2) whether it does much to rectify the nation's longer-term fiscal imbalance (little, if anything)."

Ellis Tallman
Danforth-Lewis Professor of Economics
Oberlin College
Telephone: 440/775-8592
Email: Ellis.Tallman@oberlin.edu

Expertise: Ellis Tallman has published scholarly articles in the fields of macroeconomics, economic forecasting, and historical episodes of financial crises. He has drawn attention to the United States experience during the Panic of 1907, an event that motivated the creation of the Federal Reserve System. Prior to joining Oberlin College, Mr. Tallman was a vice president and team leader for the Macro group in the Research Department at the Federal Reserve Bank of Atlanta, and also served as a visiting senior research economist at the Reserve Bank of Australia.

Quoting Tallman: "I would argue that the short-run problem is less daunting than the longer run problem that we face. As Ezra Klein notes, it is pretty much all about future health care costs. That said, it would be discouraging if we saw no effective compromise and an agreement to kick the proverbial can down the road."

Lehigh University

George Nation
Professor of Finance and Law
Lehigh University
Telephone: 610/758-4531
Email: gan0@lehigh.edu

Expertise: Nation's expertise and research interests include direct democracy. His most recent article: "We the People: The Consent of the Governed in the 21st Century: The People's Unalienable Right to Make Law." He argues that decisions regarding tax cuts and raises should be made by the American people. 

Quoting Nation: "The mistake politicians are making is trying to use the election results as some sort of referendum. This problem could be easily overcome by having the federal government follow the lead of many states, and conduct a real referendum." Examples, he says, include: charter schools in Georgia and Washington, same-sex marriage in Maine, Washington and Maryland, and a tax increase for education in California.

University of Dayton

Tony Caporale
Professor of Economics
University of Dayton
Telephone: 937/229-2403
Email: tcaporale1@udayton.edu

Expertise: Caporale's expertise includes macroeconomics and business and economic forecasting.

Quoting Caporale: "Think about how you would act if you had to order from a restaurant menu with no posted prices.  Future tax rates are now anybody's guess.  I can't see how this is not catastrophic for business confidence." 

Joe Valenzano III
Assistant Professor of Communications
University of Dayton
Telephone: 937/229-2376
Email: jvalenzanoiii1@udayton.edu

Expertise:Valenzano's research interests include rhetoric and public communication, political communication, religious communication and culture, and communication education. He can discuss the political and public discourse on the topic of the fiscal cliff.

Quoting Valenzano: "Public dialogue has been gradually replaced with public debate and demagoguery. We are confused as a nation, agreeing only that we need to stop partisan gridlock. But the problem is we have been in a state of the perpetual campaign for several election cycles now and that means we have never had a chance to recover and understand what each party actually wants to do or really believes."

Colorado College

Tom Cronin
McHugh Professor of Political Science
Colorado College
Office: 719/277-8249
Home: 719/635-5432
Email: Tom.Cronin@ColoradoCollege.edu

Expertise: Presidential leadership. American politics; leadership in America; American presidency. In his recent book, Leadership Matters, Cronin looks at the paradoxes of American leadership. He sees leadership as nuanced and filled with paradox--for example, he points out that Americans want leaders who are like themselves yet better than themselves. Americans yearn for leaders to serve the common good--yet simultaneously serve particular interests. Leadership, he says, is a realm in which rules only occasionally apply and how-to prescriptions obscure more than they enlighten. Cronin is one of the preeminent presidency scholars of the modern era, was instrumental in helping establish the Presidency Research Group of the American Political Science Association and helped revive presidency studies.

Macalester College

J. Pete Ferderer
Professor of Economics
Macalester College
Telephone: 651/696-6093
Email: ferderer@macalester.edu

Expertise: Ferderer is a macroeconomist and economic historian with interests in international economics, monetary economics, and time-series econometrics. His teaching interests include international finance and behavioral economics. His research is in economic history, financial markets, and business cycles. His current research focuses on the development of the over-the-counter security markets during the early part of the 20th century and their malfunctioning during the Great Depression. Ferderer teaches a variety of courses, including principles of economics, intermediate macroeconomics, international macroeconomics and finance, and behavioral and experimental economics.

Gary J. Kruger
Professor of Economics
Macalester College
Telephone: 651/696-6222
Email: krueger@macalester.edu

Expertise: An expert on international economies, Krueger has interests in comparative economic systems, corporate governance, transition economics, industrial organization and applied econometrics.   He teaches classes in econometrics and economics of transition.  His research is on the former Soviet Union and the transition to market economy in Russia.

Saint Michael's College

William Grover
Professor of Political Science
Saint Michael's College
Office: 802/654-2463
Home: 802/879-1474
Email: wgrover@smcvt.edu

Expertise: An expert in American politics and political institutions, and APSA Congressional Fellow who worked as a legislative aid in the Office of then-Representative, Bernie Sanders, William Grover, is author of Voices of Dissent: Critical Readings in American Politics, and of The President as Prisoner: A Structural Critique of the Carter and Reagan Years.

Professor Grover assesses the situation this way: "The idea that the budget deficit is the number one problem facing the U.S. would be laughable if it weren't so sad, and so potentially damaging to the vast majority of Americans. All you need to do to believe in this myth is ignore the economic theory, and common sense observations, since the late 1920s. Of course, the fetish of the deficit is not about economics; it's about politics, and a particularly insidious brand of politics at that. That a disturbing number of Democrats have subscribed to this deficit fetish as part of their policy agenda speaks volumes about the outcome of the 2012 elections. In many ways that count, the Republicans won the election by framing the debate. The rest is details: How best can we implement a neoliberal outlook? We're all Greece now."

Herbert Kessel
Professor of Economics
Saint Michael's College
Office: 802/654-2460
Home: 802/985-3298
Email: hkessel@smcvt.edu

Expertise: Professor Kessel, a labor economist, has been tracking changes in the quality of life of Vermonters for over 20 years and is the co-author of a number of research studies, each entitled, "The Pulse of Vermont." He is also the co-author of Vermont in Transition: A Summary of Social, Economic and Environmental Trends and has written numerous research studies of the effectiveness of Vermont based employment and training programs.

Quoting Kessel: "While our national debt as a percent of GDP is quite high (just over 100%), low and stable interest rates have reduced the burden of the debt substantially. Congress overreacted by initially refusing to raise the debt ceiling and then failing to reach an agreement over the debt with the President, they just deciding to kick the can down the road and deal with the problem after the election. So now we have put ourselves into a mindless straight jacket constraining fiscal policy, requiring significant tax increases and severe budget cutbacks, the complete opposite policy of what we need during a slow paced recovery. It's like the Congress wanted to let a non-human policy tsar, like a Hal from 2001, manage economic policy. It was John Maynard Keynes, one of the great thinkers of the last century who warned us many years ago that, The boom, not the slump, is the right time for austerity."

Patrick Walsh
Associate Professor of Economics
Saint Michael's College
Office: 802/654-2682
Cell: 802/310-8474
Email: pwalsh@smcvt.edu

Expertise: Author of "Effects of school choice on the margin: The cream is already skimmed" in Economics of Education Review, Professor Walsh teaches Economics of Health Care, Principles of Macroeconomics, Principles of Microeconomics, Public Finance.

His take on the Fiscal Crisis: "A responsible approach would be to allow the Bush tax cuts to expire for middle-class Americans, while allowing tax rates to rise on the wealthy. Congress should also raise more tax revenue by closing tax loopholes, which cost around $200 billion in lost revenue per year. Then, instead of massive across-the board spending cuts, they should focus on reforming entitlement programs like Medicare and Medicaid that are actually driving the growth in spending. This approach would put the budget on a sustainable long-term path, without killing the economy in the short run."

"As a result of political wrangling between Congress and the President over the past few years, a remarkable number of Federal tax increases and spending cuts are scheduled to occur around the first of the year. First, the Bush tax cuts will expire, raising taxes by over $200 billion per year. Second, cuts to the payroll tax, which were enacted as part of the 2009 stimulus, will also expire, raising taxes by a further $100 billion per year. Scheduled increases in other more obscure taxes will add another $75 billion or so. On the spending side, the summer 2011 debt ceiling deal outlined $65 billion in spending cuts per year starting in January. These cuts affect many government agencies but especially Defense. At the same time, unemployment benefits will expire, and the debt ceiling will need to be raised again."

Colgate University

Nicole Simpson
Associate Professor of Economics
Colgate University
Telephone: 315/228-7991
Email: nsimpson@colgate.edu

Expertise: A macroeconomist who focuses on labor issues. Her research areas include immigration, the earned income tax credit, and education. Her current work has focused on studying the determinants of immigration, the impact of the EITC on labor supply when households face credit constraints, and the relationship between credit and college investment.

Quoting Simpson on the fiscal cliff: "It was a catchy phrase, it was an extreme thought, but I think there is some reality behind the fact that things will get even uglier than they are if we don't do anything."

Georgia State University

Rajeev Dhawan
Director, Economic Forecasting Center
Georgia State University
Office: 404/413-7261
Cell: 404/867-2286

Email: rdhawan@gsu.edu

Expertise: Each quarter, Rajeev Dhawan releases his "Forecast of the Nation," in which he provides written analysis and forecast tables based on 200-plus economic variables covering GDP accounts, foreign trade, production, inflation, financial markets and more. "How dangerous is the fiscal cliff to the economy? Can it go so far as to cause a recession, albeit a mild one?" Dhawan asked in his November forecast. His answer: "It's possible, but I think we will avoid it--barely. My forecast is that GDP growth will hover around 1 percent in the coming two quarters. As political uncertainty abates and some kind of fiscal cliff resolution is reached (with retroactive features) growth will start to pick up in mid-2013. A mild hiccup is seen again in late 2013 as the temporary features to solve the fiscal cliff end and we wait for a grand bargain. Thus, GDP growth will be 1.5 percent in 2013.

Sally Wallace
Director, Fiscal Research Center, and Chair, Department of Economics
Georgia State University
Office: 404/413-0046
Cell: 404/536-4623
Email: swallace@gsu.edu

Expertise: Wallace is chair of the Department of Economics and Director of the Fiscal Research Center, which advises the state government on matters related to tax and expenditure issues. She previously served as a Financial Economist with the U.S. Treasury, Office of Tax Analysis. Her area of expertise is the individual income tax including issues related to income distribution and how individuals and firms respond to tax changes. At Treasury, she was responsible for forecasting individual income tax revenues and providing economic and revenue analysis on issues related to tax-preferred savings vehicles.

Ronald W. Blasi
Mark and Evelyn Trammell Professor of Law
Director of Low-Income Taxpayer Clinic
Georgia State University College of Law
Office: 404/413-9172
Cell: 404/314-6183
Email: rblasi@gsu.edu

Expertise: Blasi specializes in the field of federal taxation, an area in which he has taught for 26 years. His publications deal specifically with the federal taxation of financial institutions. He is the author of the annual CCH Bank Tax Guide, one of the leading treatises on the federal taxation of banks, and he has served as an expert witness, consultant and instructor for several organizations, including the Internal Revenue Service, the Federal Deposit Insurance Corporation and several private firms.

Quoting Professor Blasi: "There is a point in time when higher current tax rates will actually reduce government tax revenues. Fiscal decisions are irresponsible that fail to take into account the long-term effect of income taxes on research and development, international competitiveness, domestic employment and the economy in general caused by higher near-term tax rates.

Washington and Lee University

Molly Michelmore
Associate Professor of History
Washington and Lee University
Telephone: 540/458-8779
Email: michelmorem@wlu.edu

Expertise: Michelmore (mikel-more) has examined the development of taxing and spending policy, two areas not usually examined together, from the New Deal of the 1930s through the Reagan revolution of the 1980s, providing a new interpretation of post-New Deal American liberalism in the process. Her book, Tax and Spend: The Welfare State, Tax Politics, and the Limits of American Liberalism, not only helps readers think more clearly about taxes and government spending but also re-think their ideas about what exactly constitutes welfare.

Michelmore says that one of the stories she tells in the book is how "the American Right has managed to claim this mantle of defenders of the taxpayers, how that happened and what its consequences have been. A lot of people in the 20 to 30 age demographic today don't feel as if they're getting anything from the state, even if they are. They feel that they are being sucked dry and getting nothing back." In addition, she believes that if there is a silver lining in the current fiscal debate, it is that Americans are beginning to recognize the extent to which the tax code is used to fund various national priorities, from medical insurance coverage to home ownership.

Vassar College

Robert Rebelein
Chair and Associate Professor of Economics
Vassar College
Telephone: 845/437-7393
Email: rebelein@vassar.edu

Expertise: Robert Rebelein was a Senior Economist for the President's Council of Economic Advisers during the final six months of the Bush Administration and the first six months of the Obama Administration (2008-09), when such initiatives as the Troubled Asset Relief Program (TARP), American Recovery and Reinvestment Act, auto industry bailout, and Car Allowance Rebate System ("Cash for Clunkers") were developed. Among his special assignments during that period Rebelein advised the President's Economic Recovery Advisory Board on reforming the nation's pension systems. A decade earlier he served as a Financial Economist for the U.S. Treasury Department (1997-1999). His research focuses on U.S. macroeconomic issues, including the national debt, individual income taxes, and selected health care topics.

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