I don't understand why more people aren't freaking out about the fiscal cliff. State and local governments, with the prospect of aid receding fast, are on the verge of huge cutbacks 1/ 
From the CBO: Huge fiscal support for families in business last month, almost all of it disappearing 2/
My back of the envelope says consumer spending cuts ~ 3% of GDP coming, plus S&L govt cuts of ~1% of GDP. That's a negative demand shock of 4% of GDP, probably with a substantial multiplier. This is financial-crisis level stuff 3/
Business econs I talk to think there will be a deal. But why? The Trump "plan" is totally unworkable, but will probably prevent any real deal for months. Again, why aren't we panicking? 4/
