By David Lawder
Without congressional action to avoid a
"fiscal cliff," Americans should expect a "significant
recession" and the loss of some 2 million jobs, Congressional Budget
Office director Doug Elmendorf said in his gloomiest assessment yet.
He said the economy was already being
"held back" by the mere anticipation of the cliff and the uncertainty
surrounding it. "The sooner that uncertainty is eliminated, the
better," Elmendorf said.
The report could intensify pressure on
Congress and the White House to resolve their differences. But the likelihood
of a resolution any time soon, particularly before the November election, is
seen as slim. Chances could improve after the election for action during the
lame-duck session of Congress, but that's unpredictable as well.
Neither Democrats nor Republicans have
shown a willingness to back away from fixed positions on either budget cuts or
extension of tax cuts originally enacted during the administration of President
George W. Bush.
The "cliff" refers to the
impact of expiring tax cuts and automatic spending reductions set for 2013 as a
result of successive failures by Congress to agree on some orderly alternative
method of addressing the deficit.
The CBO said failure to avoid the cliff
would deliver a shock to the economy that would cause U.S. gross domestic
product to shrink 0.5 percent in 2013. Previously, the CBO had forecast
full-year GDP growth of 0.5 percent.
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