The term “fiscal cliff” is controversial. So Adam Davidson, the New York Times Magazine columnist and co-host of NPR’s Planet Money, prefers to call it “the self-imposed, self-destructive arbitrary deadline about resolving an inevitable problem.”

In today’s talk, filmed in TED’s New York office on Monday, Davidson explains what the fiscal cliff is and why it is so contentious. The easiest way to understand the fiscal cliff is to look at the graph below. In it, the Congressional Budget Office projects two future scenarios, the solid line showing what will happen if Bush-era tax cuts are allowed to expire in January and if government spending on everything other than major programs were cut significantly. The dotted line is what would happen if Congress opts to extend Bush-era tax cuts and does not curb government spending.

“Sometime in the next 20 years, if Congress does absolutely nothing, we’re going to hit a moment where the world’s investors and bond-buyers say, ‘We don’t trust America anymore. We’re not going to lend them any money except at really high interest rates.’ And at that moment, our economy collapses,” says Davidson. “We’re there in 20 years — we have lots of time to avoid that crisis. The fiscal cliff is one more attempt at getting the two sides to resolve the crisis.”

The crudest breakdown of the disagreement: Democrats see the way to solve the crisis as increasing taxes, especially on the rich. Meanwhile, Republicans see the key to ending the crisis as lowering government spending, to the point where taxes can be lowered too.

“When you think about the economy through these two different lenses, you understand why this crisis is so hard to solve,” says Davidson. “The worse the crisis gets, the higher the stakes, the more each side thinks they know the answer and that the other side is just going to ruin everything.”

There is hope, though, says Davidson. While Congress is embroiled in this battle, the American people are in general “moderate, pragmatic Centrists” when it comes to fiscal policy. By large, Davidson says Americans agree on the major government expenditures — Social Security, Medicare, Medicaid — though they see room for tweaks to make these systems more stable. (Defense spending, that’s another issue.) “We get to fight about all sorts of other issues — we get to hate each other on gun control, abortion, the environment — but on these fiscal issues, we are not as nearly divided as people say,” says Davidson.

In fact, when it comes to the American population at large, party identification isn’t as strong as it seems, says Davidson.

“We tend in this country to talk about Democrats and Republicans, and think there’s little group over there called Independents that’s maybe 2%,” says Davidson. “That is not the case and it has not been the case for most of modern American history.”

So, will Congress be able to diffuse the ideological butting-of-heads and solve this crisis, or will the United States drop off the edge of the fiscal cliff?

If history is any indicator, a compromise will emerge. As Davidson points out in his talk, deep-rooted battles about money have been a regular feature of American history. Alexander Hamilton and Thomas Jefferson battled about whether there should be a central bank. In 1913, there was a battle over the Federal Reserve. And then came disagreement about the gold standard, which was abandoned in 1933.

“Each of those times, we were on the verge of collapse, and nothing happened at all,” says Davidson. “Throughout it all, the dollar has been one of the most long-standing, stable, reasonable currencies — no matter how scared we’re supposed to be.”

To hear Davidson’s powerful metaphors for how both American political parties think about the economy, watch his talk. And below, some of our favorite Adam Davidson stories from Planet Money, “It’s the Economy” and more.

The ‘Mad Men’ Economic Miracle, The New York Times Magazine (Dec. 4, 2012)

Cliffhangers may have been around for more than a thousand years — since at least the composition of “One Thousand and One Nights” — but no one has monetized them as brilliantly as cable networks. In order to get paid, Charles Dickens had to sell the next chapter of his serialized novels; in order to sell advertising, ABC had to order more episodes of its hit show “Lost.” But for the next several months, AMC is converting our eagerness into millions of dollars without showing a single new episode.

Cable TV has developed one of the most clever business models in our modern economy.

Read the full column >>

The Giant Pool of Money, This American Life (May 8, 2008)

This American Life producer Alex Blumberg teams up with NPR’s Adam Davidson for the surprisingly entertaining story of how the U.S. got itself into a housing crisis. They talk to people who were actually working in the housing, banking, finance and mortgage industries, about what they thought during the boom times, and why the bust happened. And they explain that a lot of it has to do with the giant global pool of money.

Listen to this classic episode >>

This Man Makes Beautiful Suits, But He Can’t Afford To Buy One, Planet Money (Sept. 7 2012)

Peter Frew is one of a tiny number of people left in the United States who can — entirely on his own, using almost no machinery — make a classic bespoke suit. He can measure you, draw a pattern, cut the fabric and then hand-stitch a suit designed to fit your body perfectly.

Frew spent more than a decade as an apprentice for a remarkable tailor in his native Jamaica. He now sells his suits for about $4,000. Since New York is filled with very rich people who see their suits as an essential uniform, Frew has all the orders he can handle.

When I first heard about Frew and his remarkable skill, I thought: That guy must make a fortune. I was wrong.

Listen to the episode >>

Skills don’t pay the bills, The New York Times Magazine (Nov. 20, 2012)

Earlier this month, hoping to understand the future of the moribund manufacturing job market, I visited the engineering technology program at Queensborough Community College in New York City. I knew that advanced manufacturing had become reliant on computers, yet the classroom I visited had nothing but computers. As the instructor Joseph Goldenberg explained, today’s skilled factory worker is really a hybrid of an old-school machinist and a computer programmer. Goldenberg’s intro class starts with the basics of how to use cutting tools to shape a raw piece of metal. Then the real work begins: students learn to write the computer code that tells a machine how to do it much faster.

Nearly six million factory jobs, almost a third of the entire manufacturing industry, have disappeared since 2000.

Read the full column >>

What Do the Dow’s Daily Swings Mean? Not Much, Planet Money (Feb. 9, 2012)

Turn on the news on any given day, and you’re likely to hear about the Dow Jones industrial average. It is the most frequently checked, and cited, proxy of U.S. economic health. But a lot of people — maybe most — don’t even know what it is. It’s just the stock prices of 30 big companies, summed up and roughly averaged. That’s it.

And what does the daily movement of this number have to do with the lives of most Americans? Not much.

Listen to the episode >>

The Haiti Aid Dilemma, Frontline (June 2010)

Read more on this story >>

My Big Fat Belizean, Singaporean Bank Account, The New York Times Magazine (July 24, 2012)

Earlier this month, I decided to see how hard it would be to set up my own offshore bank account. I figured it would be pretty difficult, because I’m not rich and don’t have a team of tax lawyers to oversee my money and because the E.U. and U.S. governments have been cracking down on tax havens by imposing stricter tax-sharing requirements. So I proceeded with some caution.

Read the full column >>

Looking for a High-Tech Job? Try Cotton, Planet Money (May 27, 2011)

Unemployment is still at 9 percent, leaving more than 12 million Americans without work. But there are bright spots in the U.S. economy. Planet Money and Wired Magazine have spent the last six months scouring economic data and interviewing people around the country to find out what areas of our economy are doing well. It’s part of a series called Smart Jobs.

Let me boil our findings down to one quick tip. If you want a job — a good job, a job that will be around for a while and pays well — find a company that creates some new product or service that nobody else has.

For example: a greenhouse in Memphis, Tennessee.

Listen to the story >>

The term “fiscal cliff” has gained traction in the U.S. news in the past few months, at least in part because it paints a vivid metaphorical picture. Popularized by Federal Reserve Chairman Ben Bernanke, the term refers to the ill economic consequences that could occur if Congress does not change its course on several policies by January 1, 2013 — including the expiration of Bush-era tax cuts and automatic spending cuts that were agreed to in 2011. But for Congress to act, Democrats and Republicans need to find some general agreement on how to bridge the gap between the federal government’s revenues and spending. Let’s just say that’s been slow to come.

As the deadline nears, we invited three speakers — social psychologist Jonathan Haidt, data visualizationist Jer Thorp and “Planet Money” co-host Adam Davidson — to our New York office for a TED@250 salon, part of a new program to reimagine the headlines. The idea: to give us a deeper understanding of the issue and why it has been so darn difficult for American political parties to work together in recent times.

First to the stage was Jonathan Haidt, who explored “The moral roots of liberals and conservatives” at TED2008. Haidt began his talk with a dramatic statement: Four asteroids are headed for the United States, and they will hit within 50 years.

These, of course, are allegorical asteroids — climate change that could flood many of our major cities, the federal debt rising to the point where a welfare state may become untenable, a growing rise in inequality which is making us deeply distrustful of each other, and the breakdown of marriage which feeds into disparity in income. The problem, as Haidt explains it, is that the current American political climate makes it very difficult to see all four as true problems.

“In our hyper-politicized time, one person says, ‘Look! An asteroid is coming.’ And the other person won’t even look up,” says Haidt. “Retiring members of Congress say that it’s become like gang warfare.”

In his talk, Haidt looks at the social underpinnings that create this type of polarization, where fingers are pointed while real data is ignored. And he also presents several ideas for what could help relieve these tensions and get politicians working together to solve problems. One of his simplest ideas is to shift Congress’ schedule to three weeks on, one week off. This way, members of Congress will be forced to make homes in Washington, D.C., instead of flying home every week. With more politicians living in the Capitol, they’d socialize and meet each other’s families, allowing them to build common ground where the idea, “Hey, the other guy might have a point,” could surface.

At TEDxVancouver, Jer Thorp urged us to “Make data more human.” Today, he shared a fascinating project, “The Colour Economy,” in which he gave screen pixels a very human ability — to trade their red, green and blue values in pursuit of a profit. As the colored bits moved on a screen, stratifications emerged — a situation which feels all too familiar.

Thorp’s point is that data visualization can help us understand how and why things happen, and can inspire new realizations. Currently, says Thorp (shown above), there are a mishmash of images and metaphors that cloud our understanding of the economy. Could creative uses of data — data fiction, data poetry, data theater — gives us new ways of thinking?

Finally, Adam Davidson spoke, describing the fiscal cliff as “a self-imposed arbitrary deadline,” that both parties need to resolve, though neither wants to make the first move and be seen as weak. In other words, it’s a game of chicken, fueled by partisan anger.  “The worse the crisis gets, the more each side thinks they have the answer,” says Davidson.

But what’s so curious, he explains, is that the American population isn’t as polarized as one would think, and people even tend to agree — for the most part — on what kinds of decisions we should make about the federal budget. For example: When asked, people want Social Security and Medicare to stay strong.  “The American people tend to be moderate, pragmatic centrists,” says Davidson. “You’d think that if you add up Democrat and Republican, you get the American people, but that’s not what the data shows … Forty percent of people consider themselves independent.”

American history, says Davidson, is full of skirmishes about money. And yet the dollar has remained one of the most stable currencies. So when it comes to the fiscal cliff, he urges, “Instead of talking about it in vague terms that feed partisanship, let’s talk about it as what it really is — a really solvable math problem. Though not one where we’re all going to get what we want.“

After an election that seemed to bring partisanship to a fever pitch, there seemed to be a pulling together this weekend as the nation mourned those killed in the school shooting in Connecticut on December 14. When asked if he thought the same polarization would happen with gun control that has been happening over the economy, Haidt shared enthusiasm that this could be an issue that highlights commonality and brings across-the-divide cooperation. As we arrived back at our desks from the salon, a new headline appeared on NYTimes.com that suggested this may be the case: “Newtown Shooting May Cool Washington’s Partisan Passions.”