On June 8, 2012 Don Lee writes in the Los Angeles Times that fears of a new recession grow as Bush-ear tax cuts are set to expire December 31 and automatic spending cuts are set to follow. Businesses are putting expansion on hold.
Fears about a looming fiscal crisis at the end of the year are starting to pinch job growth and threatening to undercut the nation’s fragile recovery, a growing number of economists and employers say.
Federal Reserve Chairman Ben S. Bernanke, in testimony Thursday before Congress, repeatedly warned about the so-called fiscal cliff — a reference to the expiration of tax cuts Dec. 31 and the imposition of automatic spending reductions Jan. 1.
By some accounts, the U.S. economy could see an unprecedented fiscal hit of as much as $720 billion if the slated changes take effect.
They would include an end to the temporary tax cuts enacted during the George W. Bush administration and to temporary Obama administration payroll tax reductions. Spending cuts in defense and on federal programs were negotiated as part of last summer’s pact to raise the debt ceiling.
If all the changes take place, the shock will probably cause the economy to contract and possibly lead to a recession, Bernanke said.
http://www.latimes.com/business/la-fi-bernanke-economy-20120608,0,4461109.story
