The staggering new report was prepared by the Congressional Budget Office right after U.S. President Barack Obama got re-elected. President Obama is planned to offer a speech on tackling the fiscal cliff on Friday.
The report published on Thursday predicted that the economy would get into recession if there is a prolonged deadlock in Washington and the Obama government falls off the fiscal cliff for the whole year.
Unless the congressional leaders overcome a key impasse set of tax increases and automatic spending cuts is expected to hit the U.S. in January. Taxes are said to be raised for those who earns $250000 and more but the Republicans are of the view that the tax rates are kept stable for people of all classes. Democrats continue to demand that the Bush-era tax rates lapse for those making $250,000 and up. Republicans continue to insist on keeping tax rates stable for everyone.
So, President Obama now faces a daunting task to decide whether to alienate the Republicans and make a decision or work together with them and reach a combined solution.
