News From Terre Haute, Indiana

News

August 22, 2012

Analysts: Recession likely without budget accord

WASHINGTON — A new recession is likely if a stalemate over tax and spending cuts continues between Democrats and Republicans, according to fresh, dire projections by the nonpartisan Congressional Budget Office.

In its annual summertime report, the budget office said today that letting decade-old tax cuts expire and sweeping spending cuts occur in January — which will happen without congressional action — “would lead to economic conditions in 2013 that will probably be considered a recession.”

If that happened, the economy would contract by 0.5 percent — a gloomier projection than the budget office made earlier this year when it envisioned slight growth under that scenario. Unemployment would rise to around 9 percent by late next year if the standoff persists, the analysts said.

The budget office’s latest warning came amid a presidential and congressional election year in which neither President Barack Obama nor congressional Republicans have shown any signs of giving ground in their protracted battle over taxes, spending and the budget. The lethargic economy and massive federal deficits are top-flight issues in this year’s campaigns.

Obama wants to renew expiring tax cuts for everyone except individuals earning over $200,000 and couples who bring in above $250,000. Republicans are demanding that all tax cuts be extended. The two sides also have made no progress over how to prevent budget-wide spending cuts from taking effect. These automatic cuts were sat in motion by the failure of lawmakers last year to reach a bipartisan debt-reduction agreement.

Letting the tax cuts continue and preventing the spending cuts from taking effect would leave a deficit next year of just over $1 trillion. If the reverse occurs, the shortfall would be $641 billion — in effect sucking roughly $400 billion out of a U.S. economy that is already struggling.

Though continuing the tax cuts and blocking the spending cuts would produce higher economic growth over the next two years, “it would reduce output and income in the longer run and is ultimately unsustainable,” the budget office warned.

Today’s report projected a $1.1 trillion federal deficit for 2012, the fourth straight year the government’s shortfall will exceed $1 trillion.

It also envisions an economy recovering at only a modest pace the rest of this year, growing at an annual rate of 2.25 percent.

 

Text Only | Photo Reprints
News
Latest News
Multimedia

Like us on Facebook!
Community Calendar
Loading…
Events by eviesays.com
TribStar.com Poll
Front page
AP Video
NM Mom Chases Down Child Abductor Raw: Crash Sends Car Into Fla. Pool Raw: Obama Sits Down With Elementary Kids Dying Man's Blinks Lead to Murder Conviction Wash. State Releases Draft Rules for Legal Pot Raw: Driver Ejected From Truck, Over Bridge Wind Energy Push Leaves Trail of Dead Eagles Raw: Germany Protestors Picket Barbie House Horse Saved From Slaughter, Goes on to Win Big Ousted IRS Chief: Errors Not Caused by Politics Music Therapy Bonds Parents and Preemies Terror Suspect Due in Court in Idaho Friday Tensions As Israel Targets Syria in Airstrikes Fmr. IRS Head Insists No Politics in Targeting Raw: Spacewalking Astronauts Hope to Stop Leak Obama: 'Couldn't Be Prouder' of Jason Collins Raw: Bear Falls From Tampa Tree Officials Arrest Man in Idaho in Terrorism Case Today in History, May 6th Raw: Child, Stroller Falls Onto Pa. Train Tracks
NDN Video
Coffee Stop Leads To Arrest Of YouTube Sensation Wanted For Murder Bearded Dragon Reunited With Owner Marine Reunited with Warzone Companion Raw: Crash Sends Car Into Fla. Pool Beyonce Is Pregnant! SF baseball player overpaid $500,000 RETURNS money -- and team says KEEP IT $1 Million in Jewels Stolen at Cannes Film Fest Dad returns from Afghanistan, surprises family during Rays' first pitch See Jennifer Lopez's New $10m Hamptons Mansion Woman tricked into taking abortion pill Emma Watson Goes Pantless IRS scandal: Republicans seek to tie Obama to agency's woes Play of the Day: Flipping to Safety Pregnant Kim Kardashian Squeezes Her Swollen Feet Into Stilettos Top Videos of the Week: Angry Taco Bell Guy, Glacier Moves on House, Dog Hates Baths Cindy Crawford Stuns At Cannes Raw: Marines Come to Obama's Aid in the Rain CUTE: Monkey shares lollipop with dog, then HITS pooch on head with it Miranda Kerr Looks Sexy in a Bikini Photo Shoot Hatchet-wielding viral video star, once a hero, now a murder suspect
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
  • -

     

    March 12, 2010

activity
Real Estate News