US could fall off a “fiscal cliff”
The US economy could go in to recession, shrinking at a rate of 1.3% in the first half of 2013, the Congressional Budget Office said. – BBC News
From BBC News
Expiring Bush-era tax cuts are due to be amplified by $1.2tn (£760bn) of spending cuts due on 1 January.
The combination of rising taxes and deep cuts to domestic and defence spending are already on the minds of lawmakers on Capitol Hill.
If both are allowed to come into full effect the US deficit would be cut by some $607bn, the CBO estimated.
However, the combination of higher taxes on the middle class and the wealthy, as well as spending cuts, would severely impact the size of the US economy, the report added.
“Such a contraction in output in the first half of 2013 would probably be judged to be a recession.”
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