The nonpartisan Congressional Budget Office (CBO) said Tuesday that unless lawmakers act to prevent scheduled tax increases and spending cuts at the end of the year, a recession will likely result in early 2013.

Early next year income taxes are set to go up when the Bush-era tax rates expire. Automatic spending cuts totaling roughly $109 billion triggered by last August’s debt-ceiling deal are set to hit. Meanwhile, payments to physicians under Medicare will be slashed.

CBO projects that these and other elements of the so-called “fiscal cliff” will cause the economy to contract as demand dries up.

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Filed under: * Economics, Politics • Economy • Taxes • The U.S. Government • Budget • Medicare • Social Security • The National Deficit • Politics in General • House of Representatives • Office of the President • Senate

1. Bart Hall (Kansas, USA) wrote: The longer politicians attempt to delay the day of reckoning, the worse it will be. You cannot solve a problem of excess debt with even more borrowing. We’re in a depression and we might as well get on with it. May 23, 9:44 am | [comment link]

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