The nonpartisan Congressional Budget Office today released a frightening report predicting that the economy and unemployment will be at their current disastrous levels next year, even if Congress and President Obama act to avoid the “fiscal cliff” and revoke billions in tax increases and spending cuts slated to occur at the end of the year.
What’s more, the economy will remain in the dump even as the government piles on another $1 trillion in debt. Growth would be only 1.7 percent, and unemployment would remain at about the current level, standing at 8 percent.
DOES ANYONE UNDERSTAND HOW BAD THIS IS?
The government is basically pumping out a $1 trillion annual stimulus, interest rates are at about zero, AND GDP IS STILL SWIRLING AROUND IN THE TOILET.
If Congress and Obama fail to avoid the fiscal cliff, according to CBO, the deficit will only total about $600 billion, but the economy will plummet into a recession, declining by about .5 percent, and joblessness will trudge upwards to 9 percent.
In case you’re wondering, this is what the fiscal cliff looks like:
- A host of significant provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312) are set to expire, including provisions that extended reductions in tax rates and expansions of tax credits and deductions originally enacted in 2001, 2003, or 2009. (Provisions designed to limit the reach of the alternative minimum tax, or AMT, expired on December 31, 2011.)
- Sharp reductions in Medicare’s payment rates for physicians’ services are scheduled to take effect.
- Automatic enforcement procedures established by the Budget Control Act of 2011 (P.L. 112-25) to restrain discretionary and mandatory spending are set to go into effect.
- Extensions of emergency unemployment benefits and a reduction of 2 percentage points in the payroll tax for Social Security are scheduled to expire.
The White House is ringing the alarm about the prospect of edging off the cliff. What it fails to note is that things will also be miserable, although a little less so, if we don’t.
I say let’s put some more money into solar energy panels. That should turn it around.