Jansing and Co | November 08, 2012
>>> president obama is the lame duck congress now have less than two months to hammer out a deal to avoid $6.2 billion in drastic automatic spending cuts to avoid the so-called fiscal cliff.
>> there are spending cuts coming -- defense companies, construction, they may very well have to lay off workers. in addition, we've got the highest tax increase coming on virtually all economic levels. these two things will coincide to basically possibly push the u.s. economy into recession unless congress does something about it.
>> wow. richard lui is here. we've been talking about what no deal would mean and the consequences could be dire.
>> yes, chris. the fiscal cliff clock ticks on. 53 days to go. if january 1st arrives and washington fails to compromise, experts warn of an economic cataclysm. by the end of next year, unemployment could jump to 1.9% said the congressional budget office . that's almost 2 million more people without jobs. the economy would tumble at a rate similar to 2008 's great recession. as much as 4% says goldman sachs . the average household's taxes would rise $3,500, all but a tenth of u.s. households would pay higher taxes. to stop that from happening, washington needs to stop what appears to be good, a plan forged over the last two years to reduce the deficit. at the base of what's being called a drastic plan, letting bush-era tax cuts expire. that leaves $221 billion in the government covers. as i mentioned, at the cost of higher taxes for almost everyone. what's being called sequestration, that reduces costs by $65 billion. those mandatory cuts to defense and to general spending include items like education and veterans benefits . a third cost reduction, the payroll tax holiday, that expires. $95 billion is saved there. finally, the other category here on top, that includes a mix of emergency employment benefits, health care and tax cuts , and benefits. all of those end. that saves the largest chunk. if all of that happens, next year's deficit improves $607 billion. the deficit would go down almost 40%, but it's only good on paper. it would come at a price, a great price that the economy would basically go over, as you saw, a fiscal cliff. and the paradox here, chris, despite reducing the deficit here, the plan cuts provoke recession, higher unemployment, and a cut in the u.s. credit rating perhaps.
>> i'm not going to sleep tonight . thank you, richard lui .