It's Not a Fiscal Crisis!

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Friday, 28 December 2012 06:42

Let's see, if Congress does nothing then the budget deficit will fall by around $600 billion to a bit more than 2 percent of GDP. How is this a "fiscal crisis?" Of course it's not a fiscal crisis.

It is an austerity bomb. If the higher taxes and reduced pace of spending are left in place over the course of the year (not the first 2 weeks in January), then GDP growth will slow and the economy will likely fall back into recession.

Please explain why the NYT still doesn't have this straight after covering the issue endlessly for the last three months?