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Federal analysts predict a 2013 recession unless Congress acts on fiscal issues

Posted by: Leslie Black-Plumeau on May 25, 2012 - 9:45am

Automatic federal tax increases and spending cuts due to take effect this year are likely to push the economy into a recession in 2013, according to an analysis released this week by the Congressional Budget Office. The contraction would be accompanied by a dramatic fall in the federal budget deficit. 

“Policymakers face difficult trade-offs in deciding how quickly to implement policies to reduce budget deficits. On the one hand, cutting spending or increasing taxes slowly would lead to a greater accumulation of government debt; on the other hand, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion,”  explains the budget office. 

Read the report.

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