The American economy will fall into “severe recession by the spring” unless Congress lessens the tax increases and spending cuts that are set to begin in January, said Mark Zandi, chief economist at Moody’s Analytics.
“We’ve got to nail this down; uncertainty is killing us,” Zandi told lawmakers yesterday at a Joint Economic Committee hearing in Washington.
House Speaker John Boehner (R-Ohio) and President Obama are at a standoff over how to avert the so-called fiscal cliff, more than $600 billion in tax increases and spending cuts.
If Congress were to “kick the can down the road” by extending the current tax-and-spend policies, Zandi predicted the US would lose its Aaa rating because “it would signal that the political will is lacking to put the nation on a sustainable fiscal path.”