Even the Congressional Budget Office is worried about the financial cliff the U.S. is approaching. Here is an summary from Reuters
By David Lawder
Aug 22 (Reuters) - Massive spending cuts and tax increases due next year will cause even worse economic damage than previously thought if Washington fails to come up with a solution, Congress's budget office said on Wednesday.
Without congressional action to avoid a "fiscal cliff," Americans should expect a "significant recession" and the loss of some 2 million jobs, Congressional Budget Office director Doug Elmendorf said in his gloomiest assessment yet.
He said the economy was already being "held back" by the mere anticipation of the cliff and the uncertainty surrounding it. "The sooner that uncertainty is eliminated, the better," Elmendorf said.
The report could intensify pressure on Congress and the White House to resolve their differences. But the likelihood of a resolution any time soon, particularly before the November election, is seen as slim. Chances could improve after the election for action during the lame-duck session of Congress, but that's unpredictable as well.
Neither Democrats nor Republicans have shown a willingness to back away from fixed positions on either budget cuts or extension of tax cuts originally enacted during the administration of President George W. Bush.
The "cliff" refers to the impact of expiring tax cuts and automatic spending reductions set for 2013 as a result of successive failures by Congress to agree on some orderly alternative method of addressing the deficit.
The CBO said failure to avoid the cliff would deliver a shock to the economy that would cause U.S. gross domestic product to shrink 0.5 percent in 2013. Previously, the CBO had forecast full-year GDP growth of 0.5 percent.
