The Fiscal Cliff And Michael Spence On Signalling

The discussions associated with the fiscal cliff have brought to light issues that individuals with like political, educational, and/or socio-economic backgrounds passionately disagree.  When it comes to elected officials, the fiscal cliff decisions come down to vote maximization and/or personal beliefs about the benefits of reducing the costs associated with government (i.e. reducing government spending) and the risks associated with increasing the costs associated with government spending (i.e. increasing the tax burden).  To economists, who supposedly are more level headed with less personal attachment to the politics of the issue, the matter comes down to evaluating the numbers...