CBO: Taxmageddon would throw U.S. back into recession
Source: Washington Post
Tax hikes and spending cuts set to take effect in January would suck $607 billion out of the economy next year, plunging the nation at least briefly back into recession, the nonpartisan Congressional Budget Office said Tuesday.
Unless lawmakers act, the economy is likely to contract in the first half of 2013 at an annualized rate of 1.3 percent, the CBO said, before returning to 2.3 percent growth later in the year.
Canceling those tax and spending policies would protect the recovery in the short run and encourage more vibrant growth, around 4.4 percent, in 2013, the CBO said. However, unless lawmakers adopt policies that would reduce budget deficits by a comparable amount down the road, the CBO said, the national debt would continue to climb, imperiling future economic growth.
The report, Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013, comes as policymakers are bracing for the most consequential battle over government tax and spending policies in years. The George W. Bush-era tax cuts are set to expire on Dec. 31, along with a payroll tax cut proposed by President Obama. Meanwhile, sharp cuts are scheduled to hit the Pentagon and other federal agencies to meet a deal cut during last summers showdown over the nations debt limit.
Read more: http://www.washingtonpost.com/business/economy/cbo-taxmageddon-would-throw-us-back-into-recession/2012/05/22/gIQAblvliU_story.html
Thom Hartmann had a debate with a Heritage Foundation analyst about Taxmageddon. It appears that Heritage coined that neologism with a policy brief from early Apr. 2012: "Taxmageddon: Massive Tax Increase Coming in 2013".
Swede Atlanta
(3,596 posts)how the GOP will respond, if at all, to this report....
(1) The sky is falling, we cannot let the Bush tax cuts expire, at least not for the rich ones, cuz they are creating millions of jobs (at minimum wage)
(2) We can reduce the spending cuts but only for the military. We still want to eviscerate Social Security Medicare, Medicaid and anything that actually benefits a live human being.
starroute
(12,977 posts)The involvement of the Heritage Foundation suggests that it is.
TheWraith
(24,331 posts)starroute
(12,977 posts)The CBO report amounts to saying that the currently mandated mix of tax hikes and budget cuts could set off another recession.
How that is dealt with is a matter of choice. For example, one possibility is letting the Bush tax cuts expire and spending the money on infrastructure.
But the Heritage Foundation is clearly out to convince people that anything other than keeping things the way they are now (with the presumable exception of cutting entitlements) would be disastrous.
TheWraith
(24,331 posts)The CBO isn't making any argument except that the currently slated policies for next year would provoke another short recession.
AlbertCat
(17,505 posts)Exactly.
Of course keeping things the way they are now will also cause a recession.
We know what to do. The solution is not elusive. Tax those who can afford it. Give those who cannot a break. Invest in infrastructure ... which cannot be outsourced overseas. Cut military waste.
freshwest
(53,661 posts)onehandle
(51,122 posts)freshwest
(53,661 posts)Of shooting them, leave a few as an example of fossils?
DearAbby
(12,461 posts)Would not plunge the country into recession. Bullshit. Just another way for the wealthy to scream "It's the end of the world as we know it"
Fearless
(18,421 posts)Were stupid.
Iliyah
(25,111 posts)but the rich needs to pay their fair share.
DallasNE
(7,403 posts)Plus, it is not an either or situation.
Why wasn't the CBO asked to score the third option? What is that 3rd option? Keeping the tax cuts for low and medium income taxpayers while letting the Bush tax cuts for the top 2% to expire while following closely to the Simpson-Bowles recommendations on spending plus the defense savings from winding down the Afghanistan War.
Lastly, the CBO report has no mention on the impact on jobs and that makes the report somewhat meaningless.
sofa king
(10,857 posts)All we have to do to show the American voter who is on their side and who isn't is to split the tax cut extensions into two bills, one for the rich and one for the middle class.
The GOP is only there in DC to do one thing, make rich people richer. To protect that, Republicans will be forced to block and hold hostage tax cut extensions for the middle class, in an attempt to pass the cut they really care about.
From that point, no matter what the outcome, voters will know and remember that it was the Republicans who tried to raise taxes on the middle class, and tried to take money out of the wallets of something like 70% of all voters, to keep people none of us know personally fabulously wealthy.
I expect the Democrats in Congress to get that ball rolling in only a few weeks.
magic59
(429 posts)and cut military industrial welfare and you will see the biggest economic boom since the 50's. No need to cut programs for the poor.
underpants
(182,901 posts)They all seem to say that ALL of the Bush tax cuts have to left alone when in fact the CBO report probably only means the middle class tax cuts. There were middle class cuts in the Bush plan (not as large as Obama's of course) and no reasonable economist nor any historical evidence would suggest that the tax cut for the top did anything to create jobs OR weren't devastating to the budget/debt - in fact the top cuts were meant to create the debt "starve the beast".
Trillo
(9,154 posts)We could slash corporate welfare, and tax the rich, ...
or
We could slash food assistance, welfare, child care, schools, and increase low-income taxes and fees.
So, it seems a matter of priorities.