Senate Democrat plans to let the U.S. economy go off a “fiscal cliff” will cause a 6 percent drop in gross domestic product (gdp) and a two percent rise in unemployment, according to a new study released by former Congressional Budget Office Director Douglas Holtz-Eakin.
Democratic Senatorial Campaign Committee Chairman Patty Murray promised Monday in a speech at the Brookings Institution that unless Republicans agree to raise taxes on those making more than $250,000, then Democrats will allow both a $440 billion tax hike and a $108 billion spending cut to take effect on January first. “If we can’t get a good deal—a balanced deal that calls on the wealthy to pay their fair share—then I will absolutely continue this debate into 2013,” Murray said.
According to Holtz-Eakin and co-author Ike Brannon, this policy would inflict “an enormous fiscal shock” on the U.S. economy. Putting the almost-$600 billion hit in perspective, Holtz-Eakin and Brannon write:
As to the economic impact of hitting the cliff:
