August 23, 2012
The headline of a front page Washington Post article warned readers:
“Recession imminent if ‘fiscal cliff’ of tax hikes, budget cuts not averted, CBO says.”
Nope, that is not true as all faithful BTP readers know.
The Congressional Budget Office (CBO) projections for a recession are not based on Congress taking action before January 1 when the tax increases and spending cuts first take effect. The CBO projections are based on the assumption that Congress never does anything to offset the scheduled increase in taxes and cuts in spending. If, for example, Congress and the President were to reach a deal that took effect January 15th or 30th, then the vast majority of the negative impact would be avoided. It is very misleading to imply that the CBO projection in some way hinged on having a deal in place by January 1.
At one point the article referred to: “the scheduled deep cut in military spending.” A real newspaper would write this as “the scheduled cut in military spending.”
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