Lesley Williams - CBO: 'Fiscal Cliff' Could Trigger Recession

In the article, CBO: 'Fiscal Cliff' Could Trigger Recession, Corey Boles from the Wall Street Journal explains what could happen if the fiscal cliff is passed. In class we discussed the Busch Tax Cuts that end in January, along with learning about the fiscal cliff. In groups, we came up with what we thought was the best solution - to bite the bullet and go over the cliff or attempt to salvage a few tax cuts while creating new ones. Most agreed that the fiscal cliff would be the best option in the long run. It has been predicted that the fiscal cliff will cause the economy to fall into another recession by next year. Along with the recession, included is a .5 percent drop in gross domestic product (GDP) and an unemployment rate of 9 percent. These predictions are estimated to last only a year. If the fiscal cliff does go into effect, Obama’s health care laws and defense spending will be cut drastically. It also means that we will experience tax increases as well. If the tax increases and spending cuts do go into effect, we will come out with high growth rates and lower unemployment over time. If we do not take the cliff and cut government spending, we will only be hurting our economy more. The federal deficit will continue to rise, which does not need to happen considering the deficit is at an all time high. In the article, Boles explains why the cliff should be avoided and how they plan on doing so, but I disagree. I think that the best way to get us out of debt and back on track to a low unemployment rate is to take the route of the fiscal cliff. We have been spending more than what we have been making, and if nothing is done, it will only burden our generation down the road. In class we learned that the best way to get an economy out of recession is to cut government spending and increase taxes. One to two years of a slow economy will be better than the 5 plus years it could take if we don’t take the cliff.

http://online.wsj.com/article/SB10001424127887324439804578107280483982220.html