If Congress fails to act before the start of next year, the economy will again fall into recession and growth for all of 2013 will be limited to only 1.9 percent. That’s the latest prediction from the Congressional Budget Office. Its outlook is substantially gloomier than at the beginning of the year.
The galling thing about this is we need not have gotten to this point had Congress come to a reasonable agreement on solving a “fiscal cliff” that’s been staring every lawmaker in the face for months.
But thanks to the continuing stalemate, on Jan. 1 the economy will be whacked by nearly $500 billion in tax increases and spending cuts. That’s a lot to yank out of an already weak economy, one that’s “weaker than previously predicted,” as the CBO put it.
The group says the fiscal cliff would push the jobless rate from the current 8.3 percent to more than 9 percent, with unemployment locked in above 8 percent through 2014.
Neither party, however, seems willing to step out of its now accustomed role. Each accuses the other of being stubborn and unreasonable. That’s unacceptable because the increasing risk that Congress can’t come up with a reasonable solution in time is already an economic drag. Consumers are watching their wallets more closely. Businesses are reluctant to hire for fear of adding to the payroll just before a slump in demand.
Under the circumstances, the election couldn’t come soon enough. The nation needs an outcome that delivers enough clarity to finally begin clearing away the clouds of uncertainty hanging over economic growth.
Congress and the White House need to deal with this threat well before the deadline.
Copyright The Kansas City Star. Reprinted with permission. Questions? Contact Opinion editor Elizabeth Conner.