The CBO's ominous new report on the "fiscal cliff" reinforces the BRT's arguments on this key economic issue .

The report, "An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022 ," makes one projection based on current law, that is, if Congress fails to deal with the numerous expiring tax provisions, severe budget cuts under sequestration, reductions in Medicare physician payments, as well as the expiration of emergency unemployment benefits and a reduction of 2 percentage points in the payroll tax.The conclusion:

• The deficit will shrink to an estimated $641 billion in fiscal year 2013 (or 4.0 percent of GDP), almost $500 billion less than the shortfall in 2012.
• Such fiscal tightening will lead to economic conditions in 2013 that will probably be considered a recession, with real GDP declining by 0.5 percent between the fourth quarter of 2012 and the fourth quarter of 2013 and the unemployment rate rising to about 9 percent in the second half of calendar year 2013.

Business Roundtable has repeatedly warned of the consequences of failing to deal with the fiscal cliff. In a July 16 letter to Congress, Business Roundtable's chairman, Jim McNerney, president and CEO of The Boeing Company, wrote:

BRT CEOs, who represent $6 trillion in revenues and more than 14 million employees, are unified in believing that just the threat of America toppling over the "fiscal cliff" is having a harmful economic impact. Further delays in addressing the relevant issues will only increase the economy-chilling uncertainty. And relying on a post-election session of Congress to cope with a condensed schedule and the results of the election is far from a safe bet.

Congress unfortunately left for the August recess without acting, and the most one should expect before the election is a continuing resolution to keep the federal government running. In the meantime, headlines like those that follow increase the uncertainty that is slowing any economic recovery.

• Washington Post, "Recession imminent if ‘fiscal cliff’ of tax hikes, budget cuts not averted, CBO says "
• The Hill, "CBO warns of deep recession if Congress fails to avert 'fiscal cliff' "
• New York Times, "Budget Impasse Invites Recession Risk, Report Says "

(And prompted by our headline, a news search for the use of the word "loom" in tandem with "fiscal cliff." They do seem to go together.)