Are We Going Over a Cliff?
Did you know the economy is going to fall back into another recession in the first half of next year? That’s the sad news coming from the Congressional Budget Office (CBO), in a report released this week.
If current law remains unchanged, on January 1, 2013 American taxpayers will be hit with a whopping tax increase (mainly the expiration of the Bush tax cuts) and a major decrease in government spending (the result of last year’s budget deal) as well.
All told, we’re looking at a $500 billion double whammy. But aren’t economists recommending the opposite medicine? Won’t higher taxes and reduced spending dampen economic activity and slow down the current recovery? Exactly. You can think of the January 1st fiscal tsunami as a New Year’s Day “anti-stimulus” package. The CBO is predicting that the price we will pay for that package is a “double dip” recession.