December 4, 2012 The Partnership for a Secure Financial Future
In an open letter to President Obama and members of Congress, Financial Services Roundtable CEO Tim Pawlenty said lawmakers must work together to bridge over the Dec. 31 deadline and reach meaningful fiscal reform. This includes dealing with the federal budget deficit in early 2013. “It will not be easy,” he wrote, “but it needs to get done.”
In the July 2012 Hamilton Financial Index (HFI), the Partnership recognized that the fiscal cliff could have dramatic economic consequences. As negotiations creep closer to Dec. 31, the stakes get higher. The engines of our economy – small business owners -- are feeling more pessimistic than they have since 2010 due to the uncertainty, according to the latest Wells Fargo/Gallup Small Business Index.
Find out what happens if Congress and the Administration take the plunge.
This summer, the HFI noted that without congressional action before year-end to avoid the effects of new federal tax and spending policies, the U.S. could risk another recession – perhaps the largest year-over-year fiscal contraction in the past 40 years. The nonpartisan Congressional Budget Office (CBO) has reaffirmed the HFI’s sobering prediction. In November, the CBO reported that it expects the economy to shrink by 0.5 percent in 2013 and the jobless rate to rise to 9.1 percent -- up from 7.9 percent today – should Congress and the Administration fail to act.
For more detailed information on the consequences of the fiscal cliff and the effects of the ongoing uncertainty, see the post-election memo by the Financial Services Roundtable, “It’s Time to Bridge the Fiscal Cliff,” here.