Will we head off the fiscal cliff in 2013?
Based on the debt ceiling agreement between the White House and the Republican-led House, the United States faces a ‘fiscal cliff’ come 2013, with steep 8-10% mandatory cuts across most spending areas in 2013.
In addition, failing an agreement between the President and Congress, the Bush-era tax cuts will vanish on December 31st, leading to higher taxes for all.
Many economists argue that these cuts will lead America right into another recession. CNN writes:
They can go over it and push the economy into recession in 2013, as the nonpartisan Congressional Budget Office and the International Monetary Fund have projected.
Or they can avoid it. If they do, CBO projects GDP growth of 4.4% and more than 2 million new jobs in 2013.
The author argues that Congress should act now, before the election, as there will be insufficient time for a lame-duck Congress to do so after the election.
What are the chances of that happening? None, in my opinion. Not just because the Republicans have no interest in giving the President any legislative achievements before the election, but because they genuinely cannot agree.
The election will help by making concrete which of the two very different party visions America wants. If Obama wins, then it will likely be easier to get a shell-shocked Republican party to agree to his his vision of getting the uber-rich to pay a fairer share of taxes.
If Romney wins, it will be equally clear that Americans seek a return to “trickle-down” economics and a return to Bush-era economic policy. President Obama should then do the decent thing and agree to extending the Bush-era tax cuts to everyone.
But agreement before the elections? Perish the thought!
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