Fiscal cliff to improve debt outlook but cause recession
August 22nd, 2012
11:19 AM ET
2 years ago

Fiscal cliff to improve debt outlook but cause recession

NEW YORK (CNNMoney) - If the so-called fiscal cliff takes effect in 2013, the U.S. deficit outlook will improve, but scheduled tax increases and spending cuts would push the country into recession and unemployment up to 9%.

That's one of the main takeaways from an analysis Wednesday by the Congressional Budget Office, which released its updated budget and economic projections for 2012 through 2022.

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soundoff (48 Responses)
  1. Wire Palladin, S. F.

    European countries that are suffering thorough the global depression are the ones that subscribed to draconian republican spending cuts.

    August 22, 2012 12:06 pm at 12:06 pm |
  2. Sniffit

    "But Obama does have to run against Mitt Romney, a guy with a strong record of success in both the private and government sectors and a much different plan for getting the nation on a path to recovery. Mitt Romney's plan is projected to help add 12 million jobs by the end of his first term. That beats the negative job record of Obama's first term. And we need a better approach. The middle class is tired of broken promises and ineffective programs from the federal government. We don't need to go backwards to the failed strategies of 2009 and 2010."

    FLUFF. ALL OF IT. You perseverate these fluffy, substanceless, vague promises and talking point cheerleader vomit on a daily basis because Mittens hasn't given ANYONE the details, facts, numbers, data, expert opinions, and analysis to support any of his claims that you blather. Unless and until you can support any of that nonsnse with specifics and details, Mittens and his followers, including yourself, remain the used car salesmen of the policitical universe. He is a career grifter and nothing more.

    August 22, 2012 12:10 pm at 12:10 pm |
  3. Mikey

    Someone posted "obvious first step. Romney/Ryan"
    ************************************************
    Romney has said he is going to cut taxes 20% ($5T over 10 years), increase military spending, protect Social Securint and Medicare spending for at least the next decade, AND balance the budget. Anyone with high school math skills knows this is a blatant lie. It is not possible. He will blow an even bigger hole in our budget – mostly in order to give a giant tax break to himself and his country club pals.

    Ryan's plans are even worse. He would eliminate all taxes on estates, capital gains, interest, and dividends. Those who work would be taxed. Those who have a lot of wealth would not. This would even blow a bigger hole in the deficit. Plus, he would give everyone under 55 a voucher for social secutiry that grows in value at the CPI (under 3% for the last decade, when insurance costs have been rising at near 10%. This would shift the burden for Medicare to seniors, making it completely unaffordable for 95% of them in less than 20 years.

    The obvious firs step is the reelect the President and give him a Congress that thinks our country is more important that their narrow partisan goals (like destroying Obama and "making him a one term President")

    August 22, 2012 12:12 pm at 12:12 pm |
  4. demwit

    Extended Recession now or Major Depression 10yrs from now. What to do.., what to do..

    August 22, 2012 12:12 pm at 12:12 pm |
  5. Alice Rice

    he only way to avoid the fiscal cliff is to dump all Republicans in the Congressional election. This fiscal cliff will not help our country, and the Republican congress is causing it by making no decisions at all, just as a means of stonewalling the president. They are essentially saboteurs. Unfortunately, they are willing to sacrifice the nation for political spite. They did it by allowing the country's credit rating to be cut to double A when they had control over it, and they are doing it again. The current uncertainty in the market is caused by their ideological approach to government. Clearly they do not have our country's best interests in mind. The president does. Vote for the President again, and vote the Republicans out for the good of us all. Nothing can be done until they are gone.

    August 22, 2012 12:15 pm at 12:15 pm |
  6. patNY

    This was the Republican plan all along, concocted as a response to the New Deal and Great Society social safety net programs – run up crazy defecits under the excuse of national security and unending wars and cut taxes to the rich, and then say to the rest of us middle and working poor classes, "we can't afford SS, MedCare, MedAid, Education, etc." so we are gonna cut them to the point of elimination," called the Starve the Beast Plan.

    August 22, 2012 12:15 pm at 12:15 pm |
  7. Ray E. (Georgia)

    Aw, yes,
    True George W. Bush screwed up. HE thuoght you peasants could handle your own affairs. He thought YOU were smart enough to take it yourself. BUT you were too used to having a Nanny. You were too used to someone feeding you your Pablum. Aw those good old days when the Liberal's were in charge. Don't worry. You can Re-Elect Obama and wait for your welfare check.

    August 22, 2012 12:21 pm at 12:21 pm |
  8. BLKMANinAmerica

    and still repuks in Congress (who caused the drama) DO NOTHING.

    August 22, 2012 12:21 pm at 12:21 pm |
  9. GI Joe

    It's entirely up to our congress (republicans in the house) to write the correct bills that can be passed - the only way to get this country on course.

    Instead, they yell HE!! NO to every suggestion.

    August 22, 2012 12:24 pm at 12:24 pm |
  10. Hahahahahahaha

    Ray thinks he's a rich republican and that republicans actually represent him!!! Hahahahahaahhaah

    August 22, 2012 12:28 pm at 12:28 pm |
  11. Four and The Door

    Mikey
    Someone posted "obvious first step. Romney/Ryan"
    ************************************************
    Romney has said he is going to cut taxes 20% ($5T over 10 years), increase military spending, protect Social Securint and Medicare spending for at least the next decade, AND balance the budget. Anyone with high school math skills knows this is a blatant lie. It is not possible.
    ____________________________________________________________________________________________
    After the last 3 1/2 years of broken promises and ineffective programs I can understand your skepticism. So the nice think about America is you get to vote your choice. But you have plenty of recent performance data with Obama and his attempts to solve the same problems. But I can't see anything that indicates he can or will do any better going forward.

    August 22, 2012 12:30 pm at 12:30 pm |
  12. Fair is Fair

    What's your solution

    @sbp – So what's your solution then? Let everyone without money to pay for health care die? That's really GOP of you
    --------
    So what's your solution? Have the "rich" pay for your housing, your medical care, your education, your food, your retirement, etc? Here's a clue – they're not enough "rich" to pay for it all. Those "rich" are going to pack their bags and get out of Dodge, not willing to assimilate into the Borg Collective.

    August 22, 2012 12:31 pm at 12:31 pm |
  13. Claudia, Houston, Tx

    Instead of a Presidential election we need first and foremost to throw all the bums out of Congress, that's the only solution to the problems.

    August 22, 2012 12:34 pm at 12:34 pm |
  14. Linc

    Obama has driven us off the cliff. He has led on nothing other than disparaging others and divisiveness. He has done nothing for 3.5 years but talk, pose and let the crisis worsen. Four more years of continued inept leadership from Obama would be devastating. He has learned nothing and is not changing.

    August 22, 2012 12:40 pm at 12:40 pm |
  15. 8.3% unemployment - Over 8% 42 Straight months and the Obama Jobs DEPRESSION continues unabated

    Wire Palladin, S. F. - European countries that are suffering thorough the global depression are the ones that subscribed to draconian republican spending cuts.
    ========================================================================================

    European countries are suffering because NO ONE WILL LEND THEM ANY MORE MONEY TO LIVE BEYOND THEIR MEANS. Only braindead libtards and socialists think you can just keep spending and stealing forever to fund make believe land where everything is free and nobody has to work.

    August 22, 2012 01:06 pm at 1:06 pm |
  16. Sniffit

    "Those "rich" are going to pack their bags and get out of Dodge, "

    No they won't. That's hyperbolic silliness and everyone knows it. People have family and jobs and friends and deep ties to this country. This country is the best place to live in the world if you have money and are a vapid consumer. People take pride in their US citizenship and won't want to renounce it just to avoid taxes. The list goes on and on. There isn't going to be some giant diaspora of the wealthy, fleeing "oppressive taxes" (i.e., atxes that went up on their earnings past $250K by a couple percentage points) so they can go live in Dubai or Singapore. That line of demagoguery is complete nonsense. Taxes are lower than they have been for EVERYONE in the past 60+ years. A couple percentage points to the exrtemely wealthy is not going to cause our population to decrease.

    August 22, 2012 01:07 pm at 1:07 pm |
  17. Nametodd harrison

    I have yet to see a plan from Obama/Biden that is going to grow the private secter... what is he going to do different than whats already been done. This tax on millionaires/billionaires will only pay for 8 days of the Federal Gov... then what? How is this a solution? The increased taxes on the rich are permanent... why doesnt Obama make the lower tax rates on those under $200,000 permanent too? Instead... it will be a temporary hold.
    The complete cost of Iraq/Afgh war/reconstruction in 10 yrs will run up to $1.38 T by Sept. '12. In four years Obama/Biden will run up to nearly $5 T. Ive seen enough to try someone new over the term... pointing fingers all the time does not a solution make.

    August 22, 2012 01:22 pm at 1:22 pm |
  18. Ray E. (Georgia)

    Gee Claudia, Houston, Tx,
    What you don't realise is people elected these (bums). And dear Claudia, the Democrats had the congress for 40 years. Does that tell you anything?? Why after nearly 75 years of Big Liberal Social Programs why is nothing fixed?? It should have all been fixed by now shouldn't it ?? What do you supposed happened?? Why are things worse than the 1930's?? Now please, don't blame Republicians. It wasn't them that were in charge. So who Claudia???

    August 22, 2012 01:25 pm at 1:25 pm |
  19. steve

    Lets go off the cliff. Seems like that is the only way the current tax cuts eill ever expire. Cut the military budget too. Since 9/11 this country has pissed away billions on defense and security.

    August 22, 2012 01:38 pm at 1:38 pm |
  20. Hahahahahahaha

    @Fair in his own mind – So the GOP answer really IS to let the poor just die then. Thanks for clarifying the GOP position on that. You DO know you're poor right? Hahahahahahahaha

    August 22, 2012 01:43 pm at 1:43 pm |
  21. rob

    @ Mikey and Sniffit
    President Obama is the leader of the country. He is the only nationaly elected person in Washington. This Fiscal Cliff that we face next year is due solely to his spectacular lack of leadership. In years past both Dem and Repub presidents have had to deal with the opposition party controlling all or part of Congress. They had to had to either compel the opposition to go along with their policies or be politically adept enough to negotiate a workable compromise which would be able to pass into law. Clinton faced even worse opposition in Congress but, recognizing the political tea leaves, he fought the good fight with the repubs. He compromised on many policies but also stood up and won battles as well. He went on to re-election and an improving economy, lower Govt spending and increased revenue caused by the boom and lower Cap gains taxes etc.

    President Obama has shown no such ability and deserves to be voted out in Nov based on the horrible record on the economy and the prospects of the fiscal disaster looming in 2013 and beyond.

    August 22, 2012 01:51 pm at 1:51 pm |
  22. Four and The Door

    Wire Palladin, S. F.
    European countries that are suffering thorough the global depression are the ones that subscribed to draconian republican spending cuts.
    _____________________________________________________________________________________________
    And why were these cuts necessary? Because they spent themselves into debt approaching or above 100% of their GDP. Sound familiar? Yes. We are on our way and Obama seems intent on taking us directly into that ugly situation.

    August 22, 2012 01:51 pm at 1:51 pm |
  23. damo12345

    It's stunning that people think the Presidential Election would have an effect on this. Far too many people have no idea how their government works.

    It's quite simple: Congress is where the problem is.

    The Founding Fathers designed Congress to prevent "two wolves and a sheep vote on what to eat" Democracy.

    A need for compromise is built-into our government.

    At the moment, a staggering 279 out of 289 Republicans in Congress have signed Grover Norquist's pledge to never compromise on the subject of taxes.

    Our government literally can only work if people compromise, and 96.5% of the Republicans in Congress have given their word of honor that they won't.

    In the wake of the Debt Ceiling fiasco, Standard & Poor's lowered America's credit rating, specifically saying they did it because they felt that the current Congress would not accept compromise and would not allow the Bush tax cuts to expire. The elected Republicans did nothing to change their stances.

    I'm not saying "conservatives = bad". But Congress depends on give and take, it absolutely requires compromise, and 279 of the 289 Republicans sitting in Congress have promised not to do that. THAT is a huge problem.

    August 22, 2012 01:58 pm at 1:58 pm |
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