CNNMoney: Three More ‘Fiscal Cliffs’ Loom on the Horizon

Wednesday, 02 Jan 2013 11:58 AM

By Michael Kling

  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
If you’re breathing a sigh of relief now that Congress reached a compromise to avoid the dreaded fiscal cliff, don’t relax just yet.

Three more “fiscal cliffs” loom in the near future, notes CNNMoney.

For one thing, the government has reached its debt limit. If it is not raised soon, the country will default, prompting a doomsday scenario. Even if Congress increases the limit, if negotiations are anything like the 2011 donnybrook, political infighting may frighten the financial markets, harm business confidence and crimp economic recovery.

Editor's Note: The Final Turning Predicted for America. See Proof.

The Treasury Department is using its so-called “extraordinary measures” to meet government debt payments, but it will reach the end of those measures in about two months.

Sequester, the second cliff, entails automatic spending cuts, totaling about $110 billion this year, or 8 to 10 percent for most government programs. The cuts were scheduled for Jan. 1, but Congress postponed the date two months.

The cuts “would have a devastating impact on important defense and nondefense programs,” according to the White House budget office.

Congress created the sequester as part of the 2011 debt ceiling deal, hoping to force itself to control spending, yet ended up only postponing hard decisions.

The continuing budget resolution, the third cliff, is a short-term budget agreement that funds the government in lieu of a real annual budget, according to CNNMoney. Congress is supposed to approve spending for the fiscal year starting Oct. 1, but rarely passes it on time, so instead approves short-term continuing resolutions. If it doesn’t, the government would shut down many agencies. The current stopgap measure ends March 27.

Washington’s inability to reach agreements contributes to a poor economic outlook, according to Pimco CEO Mohamed El-Erian. “The new normal is a stagnant economy with an overlay of political polarization and dysfunction,” El-Erian told CNBC. “The new normal is sluggish growth and persistently high unemployment and concerns about debt and deficits.”

Political leaders, he said, may be unable to control the growing national debt without hurting economic growth.

Editor's Note: The Final Turning Predicted for America. See Proof.

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Currencies Back on Agenda as G-20 Monetary Policies Diverge

Saturday, 20 Sep 2014 10:18 AM

Currencies are back on the G-20 agenda as diverging monetary policies from the U.S. to Japan threaten to increase exchan . . .

Global Finance Heads Said to Warn of Mounting Economic Risks

Saturday, 20 Sep 2014 10:16 AM

Group of 20 finance chiefs will warn that risks to the global economy have increased in recent months, an official said, . . .

World's Richest Rise $7 Billion as Alibaba CEO Ma Surges on IPO

Friday, 19 Sep 2014 20:01 PM

The world's 400 richest people added $6.5 billion to their collective net worth this week as Alibaba Group Holding Ltd.  . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved