Ben Bernanke warns of big deficits

I guess that I have no clue why deficits as opposed to government spending levels are important. Taxes are a drag on economic incentives. But both current and future taxes can create that drag. From The Hill newspaper:

“Under current law, on Jan. 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases,” Bernanke told the House Financial Services Committee. “I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date.
“All those things are hitting on the same day, basically. It’s quite a big event.”
The tax hikes and spending cuts could knock GDP growth in 2013 down from 2.6 percent to 1 percent, according to Andrew Fieldhouse, a federal budget policy analyst with the liberal Economic Policy Institute .
“There is obviously a huge fiscal drag pending if Congress adheres to existing law,” he said. . . .