Sen. Mike Johanns says Congress must act so that the US economy doesn’t fall off a “fiscal cliff”.
When Congress left for its August break, it left plenty undone in Washington. No agreement has been reached on whether tax cuts enacted during the Bush Administration will expire at end of the year or will be extended. Also, automatic budget cuts take effect at the beginning of the year, unless Congress acts. Those cuts hang over the economy from the last time Congress failed to agree on how to cut federal spending.
The Congressional Budget Office projects that while the combination of tax increases and budget cuts would reduce the federal deficit by $560 billion, it would cut the gross domestic product by four percent, sending the country into a recession.
Johanns holds out hope not only that Congress can resolve the impasse, but that it might reach agreement on a more comprehensive plan to restore federal fiscal health.
“There is a lot of interest in trying to get a big agreement a big deal, which would include not only the sequester, but you got the tax increases that will kick in on January 1 unless something is done,” Johanns tells Kevin Thomas on Nebraska Radio Network affiliate KLIN’s Drive Time Lincoln.
“Sequester” is the odd term Congress uses to define the automatic budget cuts that at present would go into effect at the beginning of next year. A so-called super committee failed to reach agreement on budget cuts. The sequester is the fall back position.
Some have described the combination of tax increases and budget cuts as a fiscal cliff that will wreck a fragile economy still trying to recover from the 2008 recession, most notably Federal Reserve Chairman Ben Bernanke who has stated the combination of tax increases and budget cuts would take $7 trillion out of the economy over the next 10 years.
Kevin Thomas, KLIN, contributed to this report.
AUDIO: Brent Martin reports [:40]