POSTED: 10:40 a.m. HST, Nov 8, 2012
WASHINGTON » A new government report says the so-called fiscal cliff would send the economy back into recession and cause a spike in the jobless rate to 9.1 percent by next fall.
The Congressional Budget Office analysis says the combination of automatic tax increases and spending cuts would cut the deficit by $503 billion through next September. But that would cause the economy to shrink by 0.5 percent next year.
The report comes as a newly re-elected President Barack Obama and Congress are seeking ways to avert the problems.
The study estimates that America's gross domestic product would grow by 2.2 percent if the Bush-era tax rates were extended and expand by almost 3 percent if Obama's payroll tax cut and jobless benefits for the long-term unemployed are extended.
The Congressional Budget Office is a nonpartisan agency that performs budgetary and economic analysis for Congress.