Analysts: Recession likely without budget accord
WASHINGTON — A new recession is likely to occur if a stalemate over tax and spending cuts continues between Democrats and Republicans, according to new projections by the nonpartisan Congressional Budget Office.
In its annual summertime report, the budget office said today that letting decade-old tax cuts expire and sweeping spending cuts occur in January — which will happen without congressional action — “would lead to economic conditions in 2013 that will probably be considered a recession.”
If that happened, the economy would contract by 0.5 percent — a gloomier projection than the budget office made earlier this year when it envisioned slight growth under that scenario.
Unemployment would rise to about 9 percent by late next year if the standoff persists, the analysts said.
The budget office’s latest warning came amid a presidential and congressional election year in which neither President Barack Obama nor congressional Republicans have shown any signs of giving ground in their protracted battle over taxes, spending and the budget.
