The US fiscal cliff is so-called because it is a scything, indiscriminate sucking of money out of the economy by the government, to pay its bills.
The result say many is USA Inc. will take a massive hit, and lost revenues, wasted investments and costs of massive unemployment will far outweigh the savings on the public purse.
If deficit reduction is the sole aim of Capitol Hill then the cliff does not look so bad, slashing much of the debt at a stroke.
But nearly every economist agrees it would place a huge new strain on the American consumer and the wider economy when recovery appears so fragile, and strangling growth will do nothing to pay the bills long-term. Better to have more people working paying tax than wring more out of those clinging to jobs, say many.
But that is what the cliff will do, and the double whammy to go with tax rises is public spending cuts. Together they are forecast to contract economic growth by half a percent next year, and add another percent to the unemployment rate.
More and more companies sensing disaster in just five days time are trying to get things moving. Starbuck’s 120 stores in Washington are urging customers to write “Come Together” on their cups to encourage the Democrats and Republicans to settle their differences.
- 1Britain faces higher taxes and spending cuts after Brexit vote – finance minister
- 2Science and technology boom in Malopolska, Poland
- 3London Stock Exchange – Deutsche Boerse merger under threat from Brexit
- 4Standard & Poor’s strips UK of AAA credit rating
- 5London faces loss of big names as businesses look to beat Brexit by going abroad
latest economy news
Britain faces higher taxes and spending cuts after Brexit vote – finance minister
London Stock Exchange – Deutsche Boerse merger under threat from Brexit
ECB’s Draghi focuses on monetary policy alignment rather than Brexit
Standard & Poor’s strips UK of AAA credit rating
Shares and the pound rebound somewhat from Brexit sell off
Wires > Business
- 05:31 CET Suzuki Motors says Brexit to have ‘major’ impact on earnings
- 03:36 CET Porsche CEO bets big on redesigned Panamera model
- 03:26 CET Japan PM Abe urges BOJ to ensure market liquidity after Brexit vote
- 03:05 CET Sony cuts FY2017 revenue target for devices unit on weaker…
- 02:36 CET Fed’s Powell – Brexit has shifted global risks to the downside
- 01:37 CET Toyota recalling 1.43 million hybrids worldwide for air bag issue
- 00:58 CET EU Commission will do everything to prevent bank run – EU’s Juncker
- 23:52 CET Honeywell names Darius Adamczyk to succeed Dave Cote as CEO