As we discussed in our previous e-newsletter, the Congressional Budget Office (CBO) recently updated their budget and economic forecast. This report projects the U.S. economy will contract an annual rate of nearly 3% during the first half of 2013 as a result of tax increases and sequestration cuts that are currently slated to take effect early next year. For the entire year, real GDP would contract by 0.5%. The pending fiscal cliff is projected to cause the unemployment rate to increase to 9.1% in the fourth quarter of 2013. The report also projects a federal deficit of $1.12 trillion for FY 2012, which is equal to $9,500 of debt for every household in America.
It is time to put politics aside and work to avoid this fiscal cliff. The Senate and president need to act upon the House passed bills that would extend the current tax rates and replace draconian sequestration cuts with common-sense spending reductions. By working on these House passed solutions, America can avoid a recession and reduce uncertainty for job creators.