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The Congressional Budget Office offered a sobering assessment of the economic implications of plunging off the fiscal cliff Thursday, just as lawmakers prepare for a fight over taxes and spending.
If Congress and the Obama administration allow scheduled tax increases and spending cuts to occur, the economy will shrink by 0.5 percent in 2013. The unemployment rate would soar to 9.1 percent — up from 7.9 percent today.
The CBO said the outlook would be much more positive if Congress extended some or all of the expiring tax cuts and blocked the $109 billion in spending cuts slated next year for discretionary and mandatory programs.
If Congress blocked the spending cuts and extended all of the expiring tax cuts — except for the payroll tax break — the economy would grow by 2.25 percent next year. Adding the payroll tax cut and an extension of unemployment benefits would nudge the growth closer to 3 percent.
CBO: Fiscal cliff will mean recession, rise in unemployment
Where do you think you're going, Congress? House members, scheduled for a recess that would have released them to head back home and stump for votes, will be in Washington on Tuesday, Aug. 9, to vote on a $26 billion state-aid bill as part of a special session. That privileged-sounding title is a bit misleading, though, given that it's the equivalent of getting dismissed for summer break, only to be marched back to class for a special geometry lesson. The power to call a special session is listed among presidential responsibilities in the Constitution, though Congressional leadership has on occasion authorized them.
Do elections have consequences? If you have been paying attention to the financial markets, you might think so. Wall Street has had two horrible days since President Obama won a second term.
However, stock prices are not the only thing taking a hit. It appears that the job market is also suffering. In the last 48 hours, the following major corporations have announced layoffs in America (links take you to news stories about the layoffs – with details from the companies):
• Energizer -
The St. Louis-based company said Thursday that it expects to shed about 1,500 employees. When finished, the restructuring should lead to $200 million in pretax yearly savings, Energizer said. It aims to have most of its restructuring steps finished by the end of September 2014.
Hawker Beechcraft -
The company says 240 employees will lose their jobs with the closing of Hawker Beechcraft Services facilities in Little Rock, Ark.; Mesa, Ariz.; and San Antonio, Texas.
• Boeing (30% of their management staff) -
Boeing Co. said Wednesday it plans to employ 30% fewer executives at its Boeing Defense, Space & Security unit by the end of 2012 compared to 2010 levels.
Vestas Wind Systems -
Vestas Wind Systems A/S (VWS) is seeking to sell a stake of as much as 20 percent and said it’s reducing headcount by 3,000 to raise the staff cuts by the biggest wind turbine maker to almost a third over two years.
OWATONNA, Minn. - Some unwelcome economic news hit Owatonna Thursday with word that Caterpillar Inc. will close its plant in Owatonna, a move that will cost the community about 100 jobs.
Caterpillar Inc. notified employees Thursday it is closing the plant and consolidating operations within its forestry business. Production will end at the Owatonna facility by March 1, 2013. Caterpillar is offering employees at Owatonna a severance package and will work with appropriate agencies on finding those workers new opportunities.