How Much of a Threat Is the Fiscal Cliff?

NEW YORK CITY-As the US economy inches closer to January 1, so comes yet another doomsday scare . . . This one the so-called fiscal cliff, the ominous package of tax increases and spending cuts tied to a corresponding reduction in the budget deficit. But is it a harbinger of economic calamity, or will a deal be forged to avoid it? Some observers are optimistic about a pre-precipice deal while others are more skeptical.

“They’ll solve it and there won’t be a fiscal cliff,” says Joel Ross, principal at Citadel Realty Advisors. “You can’t have it happen and everyone knows it. At the end of the day if they really do go over the cliff, everyone in Washington gets obliterated. The voters will go nuts. Europe will go nuts. It will not happen.” Negotiators won’t be starting from scratch.