In a guest blog post over at the FT, Evercore Partners’ CEO Roger Altman talks about the impending fiscal changes coming in 2013:
But, there will be a profound budget moment on December 31 this year – one of the biggest in American history. This is the day when all of the Bush tax cuts expire, including the ones affecting the middle class. If these aren’t renewed, federal tax revenues are projected to rise sharply, by some $3,600bn over 10 years. The date is also the starting point for $1,200bn of mandated discretionary spending cuts over the next decade, triggered by the failure of the Congressional Super Committee last November to reach agreement. Half of these will come from defence. And lastly, the date also marks the point when legislation to raise the federal debt limit, the object of much acrimony last summer, will be necessary again.
We’ve been talking about the 2013 meme a lot. As Altman succinctly describes, the end of this year is due to see a whole lot of counter-stimulus if current legislative trends prevail.
Right now, we suspect, the dominant assumption is that everything will be renewed and the cuts will be unwound, and everything will be fine, and that’s possible. But it’s hard to imagine that the election outcome won’t be a big deal. If Obama wins, the GOP will almost certainly dig in hard on all this stuff.
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