CBO Warns of a Second Recession and Rising Unemployment Under Current Law
The Congressional Budget Office, one of Washington’s most influential number crunchers, has issued a warning that a second recession could be right around the corner. Director of the CBO, Douglas Elmendorf, said today that we are flirting with a new recession. It could hit in just a few months if a deadlocked Congress does not reach a deal. The worry is a combination of billions of dollars in tax hikes and spending cuts scheduled to take place on January 1st.
Ed Henry reported from North Las Vegas where President Obama just wrapped up a campaign event. The White House noted in a statement today that they believe House Republicans should pass an extension of the middle class Bush-era tax rates. Republicans do not agree and are pushing
for an extension of all the Bush tax rates.
The CBO also projected that for the fourth year in a row, the federal budget deficit will top one trillion dollars. The "fiscal cliff" that could lead to a recession is referring to fact that members of both parties in Congress have failed to strike a deficit deal months ago, therefore automatic cuts, known as sequestration, will take effect at the end of 2012.
Elmendorf forewarned that the unemployment rate would rise to about nine percent in the second half of next year and remain above eight percent throughout 2014, according to the CBO’s forecast under current law.