Bloomberg View: A Road Map for Avoiding the Fiscal Cliff
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How long does the U.S. have before the bond market demands much higher interest rates on Treasuries, forcing a sudden and painful belt-tightening on every American? For a sense of the answer, tune in a week or so after the presidential election.
That’s when Congress reconvenes to decide what to do about the expiring tax breaks and across-the-board spending cuts taking effect in January. Failure to modify the tax hikes and spending cuts would almost certainly induce a recession. And if all the scheduled tax increases take effect, consumers would get crushed. The Tax Policy Center reported this week that the average increase for middle-income households would be almost $2,000.