A new government study says that allowing Bush-era tax cuts to expire and a
scheduled round of automatic spending cuts to take effect would probably throw
the economy into a recession.
The Congressional Budget Office report says that the economy would shrink by
1.3 percent in the first half of next year if the government is allowed to fall
off this so-called "fiscal cliff" on Jan. 1. The cliff is what experts call the
combination of higher tax rates and more than $100 billion in automatic cuts to
the Pentagon and domestic agencies.
It's a point that Republican leaders
have hammered at again and again in an effort to move President Obama into
responsible negotiations over keeping the Bush tax cuts.
In
an exclusive interview Monday, Sen. Jeff Sessions, the ranking Republican member
of the Budget Committee, told Newsmax that keeping the cuts are
essential to preventing another recession.
“It looks like there will not
be a vote until after the election, but I can’t say that for certain — but it
certainly looks like that,” predicted Sessions. “That’s not healthy because we
need certainty in our tax rate. There’s far too much uncertainty in our
financial condition in America today.”
Last week, House Speaker John
Boehner called on Congress and the White House to work out a long-term deficit
deal and threatened not to raise the nation’s debt ceiling next year unless a
greater amount of spending cuts is enacted.
But Senate Minority Leader
Mitch McConnell has said that Obama is not behaving like an "adult" on
negotiations to stave off the fiscal disaster.
McConnell said that
without Mr. Obama taking action, nothing can be done regarding debt. "Look,
without presidential leadership, nothing is, can be accomplished," he said. "We
didn't have presidential leadership last year. It's pretty clear the president's
not going to lead on this any time soon.
"We don't control the entire
government," McConnell added. "We control the House of Representatives only.
We'd like to do something about the nation's biggest problem — spending and
debt, which is, of course, the reason for this economic melees and this high
unemployment — and whenever the president is willing to engage, we're ready to
go."
CBO's report says immediate tax increases and spending cuts would
"represent an additional drag on the weak economic expansion."
CBO is the respected nonpartisan agency of Congress that produces economic
analysis and estimates of the cost of legislation.
“Given the pattern of past
recessions as identified by the National Bureau of Economic Research, such a
contraction in output in the first half of 2013 would probably be judged to be a
recession,” the report states. A recession is technically defined as two
economic quarters of negative economic growth.
If Congress and the White
House turn off all the automatic cuts and tax increase, growth would rise to 4.4
percent, CBO predicted.
The CBO projections appear to go farther in
stating the economic risks of lawmakers failing to act than other policymakers
have gone.
Fed Chairman Ben Bernanke has warned of the risk to the
economic recovery, the Hill pointed out.
"It's very important to say
that, if no action were to be taken by the fiscal authorities, the size of the
fiscal cliff is such that I think there's absolutely no chance that the Fed
could or would have any ability to offset, whatsoever, that effect on the
economy," Bernanke told reporters in April. "I am concerned that if all the tax
increases and spending cuts that are associated with current law would take
place, absent congressional actions . . . that'd be a significant risk to the
recovery. "
Read more on Newsmax.com: CBO:
Ending Bush Tax Cuts Will Send US Off 'Fiscal Cliff'
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Note: links below Pelosi and Reid are(no civility again) Idiot!
http://www.newsmax.com/Newsfront/pelosi-obama-tax-cuts/2012/05/24/id/440174
http://dailycaller.com/2012/05/23/harry-reid-i-have-no-problem-with-obamas-bain-capital-attacks-on-romney/
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