Skip to comments.CBO: ‘Fiscal Cliff’ Could Trigger Recession (Oh well! America asked for it)
Posted on 11/08/2012 3:10:09 PM PST by tobyhill
The fiscal cliff would drive the U.S. economy back into recession next year and result in a jump in the jobless rate to 9.1% by the end of 2013, a new report from the Congressional Budget Office said.
The CBO said economic output would drop by 0.5 percentage point in 2013 if Congress fails to act to avert the tax increases and spending cuts put in motion by an earlier deficit agreement. But the CBO added the U.S. economy would in the longer run return to better growth rates and lower employment. The CBO, the independent budget arm of Congress, said the unemployment rates will fall to 5.5% by 2020.
The agency has previously forecast that the U.S. economy could fall into recession next year if nothing is done to avert the fiscal cliff.
(Excerpt) Read more at online.wsj.com ...
“The fiscal cliff would drive the U.S. economy back into recession next year...”
Stopped reading right there; the recession never left.
Nothing is gonna be Obama or the democrats' fault, gang. Not a single damn disasterous thing.
Elections have consequences - or so they tell me.
I think it’s only certian elections that have consequences. Obama’s does, John Boehner’s doesn’t. See how it works?
That’s ok.... Americans voted for it.
There is NO CLIFF.
Let it just go on and then the spending cuts are forced.
Look at the ohio election map that shows Blue and RED.
All of that RED area.. Those people voted and sent their representatives to Congress to represent them.
I think the social security and bush cut changes will hit me by $1600 next year. I don’t know about how cuts in federal spending or obamacare will impact me directly, but I say let it run its course....it’s what obama has wanted all along and I say give it to him. People need to feel some pain.
I don’t think I’d classify this as a recession episode.
You end up with 120k people in the DC area who will be let go...who all tend to make $70k or more....with no other industry within 100 miles that would ever offer them another job. A second wave of people...from the service industry in DC...probably around 20k...would lose their jobs in the months after the first wave.
Foreclosures and dumped cars would be the norm within six months. Property values would drop. Bankruptcies would jump by thirty percent in the local area easily.
I should add...that only covers the DC region. This would be a giant wave across the US. Figure at least 250k gov’t workers would eventually be dumped. No industry or business operation is going to pick these guys up.
If you wanted a 1930’s style depression...this would be the most practical way of accomplishing that.
I will offer this observation...there are various ways to cut the budget and start to do a yearly five-percent cut on personnel for four years. You could force early retirement onto a quarter of the candidates very easily. You could shutdown fifty national parks within thirty days and just declare them closed to the public, or offer them to states who want to pay and maintain them.
There are smart ways of handing budget cuts. So far, I haven’t’ seen any idiot on TV willing to explain them in public. I think most people want to just keep going with everything intact.
hunger and hard times usually triggers the people to force corrections in their government body. Remember the last Romainien communist president Nicolae CeauÈescu and how the people retired him? That kind of send off of a fellow politician keeps the rest of them honest and focused on what is good for the people and not just themselves, at least for several generations.
With the CBO’s noted track record of UNDER reporting the actual numbers U-3 Unemployment should be about 12% with REAL U-6 Unemployment somewhere around 25%. Of course none of the bureaucrats at the CBO ever have to worry about their jobs.
The market certainly seems to think so!
Fiscal cliff should result in a depression and let Mr. Smart street wise only figure out how he is going to solve the problem. Will probably invite Putin in the white house for a beer summit.
All Boehner and every Republican in Congress has to say is:
We Republicans are willing to return to the Clinton Tax Rates if we also return to the Clinton Spending Rates.
For God's sake, Republicans, get some talking points and keep repeating them over and over.
That's what the Democrats do and it works.
Bingo. Jump off the cliff. Return to the Clinton heyday. I do t care if thousands of left-leaning government workers in DC get the pink slip, especially if they are Obamunists.
Elections have consequences, freeloader class.
Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
- H.L. Mencken
Go for it. Better get it over with, now. The sooner done, the sooner we can climb out.
“There are smart ways of handing budget cuts.”
Maybe it’s time to re-visit Connie Mack’s One Percent Plan.
An expendable government department and employee is just that, expendable. Even those that are not expendable, become expendable when the hatchet falls. By all means, FIRE many of them. DC will have to suffer. Start with every one in the EPA. Leave one guy to answer the phone, or not.
All those left, 30% pay cut, 10 personal days, No pension, 3% 401K/403B match, THEY pay 50% of their health care insurance. All retirees 30% pension hair cut, They pay their own Medicare Supplements. That is what happens in Bankruptcies and the U.S. Government is bankrupt.
Better yet, DO NOT increase the debt ceiling. Simply live on the monthly revenue and start to SELL government lands on the open market. The U.S. Government owns trillions of dollars and hundreds of millions of hectares of land, and a vast majority is NOT parks. They own hundreds of billions of dollars worth of buildings, Sell them all, lease back what is absolutely necessary.
United States government has direct ownership of almost 650 million acres of land (2.63 million square kilometers) nearly 30% of its total territory. Sell some of it, Hell sell most of it. What you can not sell LEASE for the mineral rights.
Also formulate a plan for the unavoidable default that is destined to happen when no one wants our worthless paper. Remember the Federal Reserve is buying around 70% of the debt issued RIGHT NOW! We are going to have to decide what portion of the debt can be paid and reduce the payment made to that amount. Once again that is what happens during a bankruptcy. And the U.S. Government is Bankrupt. They live high on the hog, way above their means.
Desperate times call for desperate measures. a band aid removed quickly is painful for the least period of time.
I am completely floored, depressed etc. that Romney lost. The only little tiny ray of sunshine is that now when anyone complains about the economy, I can say, you voted for him, now live with it.
I like the way you think! Awesome post!
the first thing that leaps to mind is “how accurate are the CBO’s projections?”
so, i googled, and one of the first results was
which is far too long to read right now, but if you skip down to Figure 8 on page 29 you can easily see that CBO projects are less accurate than a random-walk model.
in other words, CBO projections are essentially useless noise
Good, bring it on. Too late to stop it now.
Trust me.... my insults will be harsh, in your face and nonstop. ;>)
“This would be a giant wave across the US. Figure at least 250k govt workers would eventually be dumped.”
Over the past few years (thanks to Governor Christie and his property tax cap) NJ has laid off THOUSANDS of cops, teachers, and firefighters - mostly in areas that weren’t paying them out of their own property tax bases (as the rest of us have to do in NJ). Fed and state aid ran out, and the layoffs have been coming every year since as these workers fight for 4+% annual raises but can only be paid out of 2% tax hikes. Each year there will be less of these workers, but they will be a year older and a year more expensive.
“You could force early retirement onto a quarter of the candidates very easily.”
An increasing number of these workers are rejecting buyouts because they know they have no value in the private sector, they spent their oversized paychecks as they “worked”, and their compensation and perks are so superior to anything the private sector offers anyone else at this point (unless you are a CEO).
“I think most people want to just keep going with everything intact.”
Most middle class people know this is impossible; our taxes have remained high as wages remain stagnant and are eaten away by inflation. The permanent multi-generational welfare class wants things to continue as usual; here in NJ they are looking at a grim reality as their police protection is pulled and their neighborhoods start to resemble Mogadishu.