November 1st, 2012
08:20 AM ET

Breaking the deadlock

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.

Read the full column at TIME here


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soundoff (8 Responses)
  1. Patrick

    The big problem here is that since the M.I.C.(military-industrial-complex) owns the vast majority in Congress and the White House, there is virtually no chance for a reasonable cut in military spending nor foreign aid. These two items have become a veritable cancer on the national treasury but the people in Washington today think only about themselves and how to become yet wealthier! This will, if unchecked, bring this country to it's very knees!!!

    November 1, 2012 at 11:27 am | Reply
    • j. von hettlingen

      Indeed to cut spendings would pose a huge problem for Romney, should he be elected. If not, he might just as well be relieved. Sitting in the Oval Office is not an enviable job momentarily. Perhaps Romney should let Obama stay for another term to clean up the mess, before he claims this office next time.

      November 1, 2012 at 6:04 pm | Reply
      • cocoasurfer

        I'm trying to set the aim. The U.S is getting all the heat but catch your breath a minute. Read the speech the IEA gave to Norway on 8/25/2014. All the religious smoke and mirrors are blinding the real purpose of stabilizing IRAQ. Maliki just didn't support the Sunni so now it's a little crazy. BP, Exxon Mobile, and Dutch Shell are already under contract to produce the last of the big sweet oil deposits in IRAQ. The Kurd are also helping out because the fields are not in the south like most of the oil. It's north. The U.S is also supported by China because they also have the largest consumption of oil and have their own big boy going in to contract for their share. It's a five year plan to make IRAQ the second largest producer in the world. By 2035 China will be all but 17% dependent on foreign oil. They will also be the largest consumer. Iraq will be on line to produce over 200,000,000 BpD. I know a religious war is a little more interesting but so is The game of Thrones. you can almost lay the maps over each other, Conflict and future oil production. America is already shipping oil to china due to low consumption here. Production is high, the highest in the world right now. we're No.1 in production. We have to keep the barrel over a dollar to gain. Low consumption= low cost. Smart people know that Nations are joining together to form a new World order. It is actually a good thing because it will also regulate pollution from oil production. the trenches of war are no different than When Rome took land or when rebel Europeans took the Americas. People died. The difference now is the major players are starting to understand the brutal results of industry on the Earth. It's a cold reality but undeveloped nations will fall by the masses before 2050. Look at the list of countries on the board of the IEA. you will see. It will be a hopeful event, If Iran and Syria will join the IEA, Maybe helping them Ice the ISIL. Will expedite Peace a modernization to all the world. SELL YOUR CAMELS. There no room for this brutal existence anymore. Be thankful you're on the right soil my brothers and sisters. PEACE.

        August 29, 2014 at 12:49 am |
  2. matt

    Term limits aren't a reality The dream continues.

    November 1, 2012 at 1:44 pm | Reply
  3. Muin

    How come U.S have 16 trillion dollars in deficit if CBO is such an effective organization? Did it forget to give warning about consequences of tax cut? Did it forget to give warning about consequence of bush medicare deal and keeping iraq war off the budget? I won't get into repeal of glass stegall act because CBO don't have talented people to understand the consequence of repealing glass stegall act. Even math PH. D holder Alan Greenspan did not understand why CDO's were getting triple A rating from rating agencies.

    November 2, 2012 at 1:35 am | Reply
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    November 6, 2012 at 3:11 pm | Reply
  5. cocoasurfer

    I'm trying to set the aim. The U.S is getting all the heat but catch your breath a minute. Read the speech IEA gave to Norway on 8/25/2014. All the religious smoke and mirrors are blinding the real purpose of stabilizing IRAQ. Maliki just didn't support the Sunni so now its a little crazy. BP, Exxon Mobile, and Dutch Shell are already under contract to produce the last of the big sweet oil deposits in IRAQ. The Kurd are also helping out because the fields are not in the south like most of the oil. It's north. The U.S is also supported by China because they also have the largest consumption of oil and have their own big boy going in to contract for their share. Its a five year plan to make IRAQ the second largest producer in the world. By 2035 China will al but 17% dependent on foreign oil. Iraq will be on line to produce over 200,000,000 BpD. I know a religious war is a little more interesting but so is The game of Thrones. you can almost lay the maps over each other, Conflict and future oil production. America is already shipping oil to china due to low consumption here. Production is high, the highest in the world right now we're No.1 in production. We have to keep the barrel over a dollar to gain. Low consumption= low cost. Smart people know that Nations are joining together to form a new World order. It is actually a good thing because it will also regulate pollution from oil production. the trenches of war are no different than When Rome took land or When rebel Europeans took the Americas. People died. The difference now is the major players are starting to understand the brutal results of industry on the Earth. Its a cold reality but undeveloped nations will fall by the masses before 2050. Look at the list of countries on the board of the IEA. you will see. Peace a modernization to all the world. sell your camels. There no room for this brutal existence anymore. Be thankful your on the right soil my brothers and sisters. PEACE.

    August 29, 2014 at 12:36 am | Reply

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