CBO: Fiscal cliff will mean recession, rise in unemployment

CBO: Fiscal cliff will mean recession, rise in unemployment

The Congressional Budget Office sent a requested report to Senate Finance Committee Chairman Max Baucus (D-Mont.) and the outlook isn't nice.

They say unemployment will rise and the economy will shrink in 2013 unless the dreaded tax increases and spending cuts set to take effect January 1st are averted.

The CBO says extending the tax cuts and spending the $109 billion would make things easier.

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

Democrats in the past have threatened to let it all fall
related thread Democrats threaten to go over ‘fiscal cliff’ if GOP fails to raise taxes

Lots of Jealousy involved .....

reply to post by xuenchen


Just to point at the obvious, while the official unemployment rate has dropped, real unemployment has not dropped, as the official reduction has largely been thanks to people being reclassified as discouraged workers. That means a 1.2% increase in the official rate will likely equate to a true increase of at least 2.4% as workers become reclassified and drop off the official rolls alongside the newly unemployed. That 2.4% would be added to the real uneployment report of 15.2%, giving us a staggering 17.6% unemployment rate (AKA the U6 rate)
Source

We had 8 years between the depression of 1921 and the Great Depression. The nation went from 11.7% unemployment to a "phantom recovery", then plunged into the Great Depression with unemployment skyrocketing to 25%... The Fed expanded the money supply dramatically in those 8 years and, as Murray Rothbard correctly identified, made the Great Depression's impact on America infinitely more disasterous through their earlier interference.

Everybody in 2008 who cried "The Great Depression #2 is here" were wrong. #2 is on it's way, but 2008 was just a warning shot which the government and the FED idiotically mishandled to all of our detriments.

Yeah, this is a mess and this really is both parties at the Congressional level as much or more than anything. That Super Committee nonsense was supposed to have been formed to solve this wayyy back but as all may recall, they couldn't agree. Then Congress and the President couldn't agree more recently.

So a bad bad deal in terms of a penalty no one expected to really see happen, may actually happen because no one in elected office can put America first and party second. (sigh) The sequestration cuts are automatic, mandatory and nothing but a compromise between now and Jan 1st can stop it.

Now..these are the moments in the United States where the Special Session powers the President has to call Congress into session whether they like it or not would come in very handy. It's been done before and Congress doesn't much appreciate it. It FORCES the point and gets the job done though. If they won't put politicals aside, the entire bunch of them should be compelled to sit on Capital Hill right through Christmas.

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.

Source

Obama has used it, although not aggressively like this. If things are allowed to "just happen" though, it will be very bad. So doom on them all and Obama should make them lose their Holidays if they can't do their elected duty, IMO.

The roof, the roof, the roof is on fire
we dont need no water let ##snipped## burn.

I think they may actually accomplish something this time. Lame ducks have nothing to fear at this point and everything to gain (cred for their next run)

The newbie's can blame it on the outgoing oppsition. But, were are running out of time. Two major holiday's will cut into the remaining six weeks.

Time for congress-peoples to put on their big boy and girl undies and act like adults and make a few compromises, I hope

It's Layoff Season. Expect that glowing employment number to go way back above its Obama norm of 8+%. Just a convenient dip around the election....

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.

www.theblaze.com...

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.

www.kare11.com...

The military contract sector is already bracing for a big whack!!

Just wanted to post my predictions for Obama's little "fiscal cliff" speech coming up this afternoon and upcoming budget talks.

He'll appeal to Congress to do THEIR job. (Wondering if he'll even make it sound like he'll have much if any involvement in the whole thing.)

He'll appeal to the American people to hound their congress people (so he doesn't have to). He'll once again try to convince the American people that Washington can only change from the outside in, not the inside out, because he's not a strong enough leader.

I still haven't decided how he's going to handle John Boehner's remarks today. Will he directly challenge him? I read that a mandate has come out from the Democrats to raise taxes on the wealthy. What will he say? Will he mention it at all? Will he stick with his campaign statements of raising taxes on those who make over $1 million per year, or will he revert back to the $250,000 per year since he doesn't have anyone to answer to any more?

Any other thoughts or predictions on this?

They will build a BRIDGe to put it off for a year

Then another

Then another

Then another

Undrestand now?

There’s something that not many seem to be considering. That is the fact that the fiscal cliff may have been the solution that the super committee came up with in late 2011. Publicly they admitted to failure, but behind the scenes they may have crafted an agreement that addresses our debt problems while at the same time allowing both sides to publicly oppose it and appear to back their constituency. Knowing that no agreement could actually be made without alienating those they represent, they admit to failure and mute the fact that they did come to an agreement. An agreement passed with little fanfare under the guise of being a deterrent to ignoring our fiscal issues when in fact it was the solution all along. If this is the case, I would expect the failure to be followed by a large infrastructure/housing stimulus package to offset the tax hikes in the near term.