Thursday, September 6, 2012

Citigroup Orzag: Congress Will Take US Over Fiscal Cliff, Deal With It Next Year

U.S. lawmakers will allow the country to go over a fiscal cliff on New Year's Eve but quickly return in January and deal with tax increases and spending cuts striking at the same time retroactively, said Peter Orszag, vice chairman of global banking at Citigroup.

At the end of the year, the Bush-era tax cuts and other tax breaks expire at the same time that automatic cuts in government spending kick in, a combination known as a fiscal cliff that could send the country sliding into recession next year if left unchecked by lawmakers.

Don't expect lawmakers to address the cliff during this election year, but do expect them to try and address the problem retroactively after elections by adjusting the timing and scope of the adjustments as well as lifting the nation's borrowing limits to meet spending needs, Orszag said.

More @ Newsmax


  1. So if Mr Orszag is right, our tax rates will go down at the same time that spending goes down, though I am not holding my breath. But if it does happen, it is a bad thing how? I know that Gov spending is one component of GDP and that if we cut Gov spending but spend the money someplace else, obviously GDP goes down. However, since our GDP is artificially high anyway (because we're spending borrowed money), maybe that is exactly what should happen.