Registered: Aug 2003
10-28-12 08:38 PM
by Jason Lange WASHINGTON | Sun Oct 28, 2012 1:57pm EDT
"(Reuters) - The United States runs the risk of a recession far deeper than many
investors and policymakers may think if lawmakers fail to avert looming tax hikes
and cuts to public spending.
Absent action by Congress, the country will face the so-called fiscal cliff at the start
of next year, a combination of lower spending and higher taxes that is expected to
extract about $600 billion from the economy.
Many economists think every dollar of deficit reduction will subtract nearly the same
amount from economic growth.
By that measure, the current course could cause the economy to contract by 0.5 %
in 2013, according to estimates by the Congressional Budget Office (CBO) that
have been largely embraced by Wall Street and the U.S. Federal Reserve.
But research by economists in academia and at the International Monetary Fund
suggests a dollar of deficit reduction could drain as much as $1.70 from the
economy, making the prospective belt tightening much more dangerous." - more