Fed chairman Ben Bernanke gave a carrot and stick speech to encourage lawmakers to reach a deal on the fiscal cliff, the term he coined to describe the automatic spending cuts and tax hikes due to take effect at the end of the year. The carrot was that 2013 could be a good year for the economy if a fiscal agreement is reached quickly and amicably. The stick is that uncertainty is stifling the economy and failure to reach an agreement would further sap confidence in addition to the actual harm of the fiscal contraction.
Bernanke didn't do the country any favors by coining this term. It's fine if he wants to describe the limits of what monetary policy can do, but he has no business prescribing what politicians should do. In fairness, he is not dictating actual terms but by preaching the need for a "solution", he implies that the fiscal cliff is a problem and not a choice. He is providing political cover for deficit hypocrites, who say they want to reduce the deficit, but balk at the impact of a program that actually does it.
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