Everyone is freaking out about the fiscal cliff that U.S.economy faces in 2013.
However, the situation might be so dire that it could potentially end partisanship at least temporarily, writes Citigroup’s Steve Wieting.
Here’s an excerpt from Wieting’s note to clients this week:
The last and possibly most critical problem that requires solving is the fiscal train wreck that the country is heading into if it does not address its deficits and debt. Fortunately, there are a slew of programs ending this year and the next Congress and Administration will be forced to address $500 billion of expiring programs and spending cuts (see Figure 17); a whopping 3.4% of GDP! Such enormous pressure to address tax and entitlement reform is quite possibly the only thing that will generate some level of forced bipartisanship that might not otherwise be possible, but it will have to wait until after the elections, in our opinion.
Here’s a chart breaking down the impact of inactivity.
Photo: Citi Investment Research & Analysis