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Outlook for 2013 depends on fiscal cliff talks, economist says

DULUTH -- For economist Donald Ratajczak, 2013 looks like a promising year, even though politicians in Washington could cause a short recession.

During an annual address to the Council for Quality Growth Wednesday, the retired Georgia State professor said signs have been pointing toward an emergence from the financial doldrums of the past few years, but said that the speed of it depends on the outcome of the current "fiscal cliff" talks at the nation's Capitol.

"The fiscal cliff is a frightening event. ... There is a serious problem here," Ratajczak said, responding to recent comments from Newt Gingrich that the debate was no more than political posturing.

The scheduled change in the tax code and deep cuts to defense spending could cancel out the gross domestic product growth that has happened in the past few months, he said. "Basically, you've got a recession," he said, adding that the event would be "policy induced." "You don't have to be an economist to say it's going to be a recession. It is serious stuff."

Despite the dire prediction, Ratajczak said the country could emerge from the problem in the second half of 2013.

"We will come back, even if we go over the cliff," he said, adding that he believes both Democrats and Republicans are correct: revenue increases are needed, along with spending cuts.

He said he supports the president's call for a stimulus bill to improve infrastructure but said his plan to cut payments to service providers for Medicare is not the solution.

"I will be disappointed if we don't come out with something that isn't $5 or $6 trillion," in righting the deficit, he said, adding that he wished legislators would talk about preserving the basics of Social Security and Medicare while taking another look at the add-ons to the programs.

"I think it's 50-50 that these guys are going to come up with a solution," he said.

But even if the country slips into recession, Ratajczak said it would be a short one, with recent increases in productivity and exports tied to a comeback of the housing industry.

The housing increase was especially good news for the Council for Quality Growth crowd, filled with engineers, architects, builders and professionals tied to construction.

"I was encouraged overall," said Doug Dillard, the board's outgoing chairman. "That surprised me," he added of the prediction of a short dip due to the fiscall cliff. "That's good. But if it's true, it might take some pressure off Washington to do something about it, and they need to do something about it."

Ratajczak said he believes the leaders could find a solution for the spate of fiscal issues.

"I'm more optimistic than pessimistic," he said. "I only wish I didn't have to rely on Congress."

Comments

WhirledPeas 1 year, 11 months ago

Newt is right. The "fiscal cliff" is an artificial line drawn in the sand. No one really knows when it will hit. But the crazy spending is real. It has to be addressed or that cliff will have to be dealt with one way or another. But Obama will not cut the crazy spending.

"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. " Thomas Jefferson

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BurritoJones 1 year, 11 months ago

And a side note: your "quote" from Jefferson was never actually his. It does not exist in any of his writings and wasn't attributed to him until someone in the blogosphere started circulating it.

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Cleanupguy 1 year, 11 months ago

Absolutely right on the Jefferson quote, but it shore does sound purty!

Oh, sure - now you're presentig facts and such. Probably all biased and made up and all that there , yeah, that's it - in 5 - 4 - 3 - 2 -1 ....

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Gwinnettsince1991 1 year, 11 months ago

Unless both sides give, we have no hope. Taxes on those above $250K AND Entitlement program cutting has to happen. Unless both sides are willing, nothing will get better. Sit down, Shut up and stop campainging-the election is over. Get something done.

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Cleanupguy 1 year, 11 months ago

Amen! The key word is a "balanced" approach, which has been suggested since sequestration was enacted.

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JV 1 year, 11 months ago

Amid 'Cliff' Stalemate, Main Street Deteriorates

"Vlietstra adds that the 'fiscal cliff' debate has largely focused on taxing the rich; specifically, whether to raise the tax rate on incomes exceeding $250,000. But self-employed and small-business owners would also be affected by raising the tax rate for the wealthy."

"That's because many business owners combine their business and personal incomes. And if you happen to a run a business with a spouse, it's not that difficult to exceed the $250,000 mark."

http://finance.yahoo.com/news/amid-cliff-stalemate-main-street-134723016.html

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jack 1 year, 11 months ago

It isn't about cutting spending or raising taxes; the only thing that really matters is who gets the blame.

God help us.

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notblind 1 year, 11 months ago

It's well documented that raising the taxes on the 'wealthy' will have no effect on the deficit since Uncle BO is NOT going to cut spending, just the opposite in fact.

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