The Super Committee’s failure to pass new deficit reduction legislation and its implications | Eurobank
Επιλέξτε γλώσσα Top Menu Main Menu Extra Button Menu Page Contents Footer Αναζήτηση

The Super Committee’s failure to pass new deficit reduction legislation and its implications

• The US super committee, charged with finding $1.5trn of additional budgetary savings by November 23, has failed to agree on a deficit reduction plan, triggering automatic spending cuts during 2013-2021.
• Although the direct medium-term implications from the automatic spending cuts for real economic activity are minimal, the committee’s failure has reduced the likelihood of an extension of the payroll tax cut and emergency unemployment benefits, set to expire at year end.
• Our 2012 GDP forecast of about 2.0% supposes the extension of those provisions through next year. However, if Congress leaves both of them to expire, this would trigger a significant tightening in fiscal policy, reducing real GDP growth to a year average of 1.4%.