Steep budget cuts are linked to recession and higher unemployment in Europe, argue several commentators (see here for example). Are they right? Certainly, some countries have struggled economically when reducing deficits before their economies have made a recovery.
UPDATE: This blog has been updated to include CBO's brief about the fiscal cliff.
The 2012 Fiscal Summit presented by the Peter G. Peterson Foundation is today. Watch live here now and follow on Twitter with #FiscalSummit.
Speakers include former President Bill Clinton, Speaker of the House John Boehner, House Budget Committee Chair Paul Ryan, House Budget Committee Ranking Member Chris Van Hollen, Treasury Secretary Timothy Geithner, Senator Rob Portman, Travelers Companies, Inc. Chairman and CEO Jay Fishman, and former Senator and Fiscal Commission Co-Chair Alan Simpson.
The news that Britain has entered into a double-dip recession touched off a fierce debate last week over the role of austerity in the country's downturn.
Federal Reserve chairman Ben Bernanke held a press conference yesterday following the conclusion of the Federal Open Market Committee meeting. Questions spanned a variety of topics including the Fed's current monetary policy stance, the economic outlook, the possible threat posed by European troubles, and Fed transparency. But one question did come up about the fiscal cliff and how the Fed would react if no action were taken. Here are his remarks:
Our recent paper on the fiscal cliff details the short-term or longer-term economic problems that the country will face if lawmakers either allow everything in the fiscal cliff to occur as scheduled or if they decide to extend it all. This blog will look farther into the potential short-term impacts, attempting to quantify what the cliff's 2013 effects would do to the economy.
Richard Haass, the President of the Council on Foreign Relations, argues that the biggest threat to U.S. national security might not be a continent away, but right here in Washington. In an interview with the Daily Ticker, Haass said that domestic issues, including the failure to address rising federal debt, might hinder our international standing in the future. Specifically, he said: