By Fareed Zakaria
Unless Congress acts, the spending cuts and tax increases that would be triggered automatically next January would take 5.1% out of the country's GDP in one year, according to the Congressional Budget Office. That would be one of the most severe experiments with austerity in history–larger than anything Greece, Spain, Italy or the U.K. has tried. In fact, it is almost three times the size of Britain's program. And the results of those European austerity policies have thus far been a dramatic slowdown in economic growth and a sharp spike in unemployment. Virtually every economist who has studied this believes that similar measures, even if enacted for a few months, could push the U.S. into a double-dip recession.
Even a prominent CEO-sponsored public campaign geared explicitly toward deficit reduction has warned that this much reduction this fast would be catastrophic for the country. In fact, just the fear that it might happen has already stopped companies from expanding. And once again, the rest of the world watches to see if the U.S.–the center of the global economy–will actually commit economic hara-kiri.