The CBO recently released their Budget and Fiscal Outlook. Among other interesting things, they predict that a slow recovery will continue through the end of this year, to be followed in 2013 by a slight recession.
Their prediction of a recession is predicated on a couple of things all happening at once. The Bush tax cuts are expiring, automatic spending cuts are scheduled to take place, doctors will be reimbursed less for medicaid, and various stimulus programs are ending. Though some of these indicators reveal a Keynesian perspective, said perspective really isn't too overwhelming.
As always with CBO numbers, the biggest problem is that they are constrained by law to work with the assumptions politicians give them, to only work with the data in front of them, and to not engage in guesswork about what may happen. And honestly in this case I am not sure it matters.
I think the massive tax increases headed our way next year are going to do massive damage to our economy. In fact, the mere expectation of tax increases has already put a damper on business growth and development.
I do not, however, think the other factors mentioned by the CBO are going to create much harm/damage.
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