WASHINGTON (AP) — A new recession is likely if a stalemate over tax and spending cuts continues between Democrats and Republicans, according to fresh, dire projections by the nonpartisan Congressional Budget Office.
In its annual summertime report, the budget office said Wednesday that letting decade-old tax cuts expire and sweeping spending cuts occur in January — which will happen without congressional action — "would lead to economic conditions in 2013 that will probably be considered a recession."
If that happened, the economy would contract by 0.5 percent — a gloomier projection than the budget office made earlier this year when it envisioned slight growth under that scenario. Unemployment would rise to around 9 percent by late next year if the standoff persists, the analysts said, with budget office Director Douglas Elmendorf telling reporters that failing to resolve it would cost 2 million jobs.
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