As a general rule, the U.S. Congress does nothing, except to avoid the consequences of doing nothing. That's why today's report from the Congressional Budget Office is so important: It states clearly what happens if nothing happens between now and January. The answer is, well, budgetpocalypse.



CBO projects that the so-called "fiscal cliff" -- a double-whammy of tax hikes and spending cuts -- in early 2013 will produce a short and sharp recession followed by rising unemployment throughout the entire year. If you want to know why the Do-Nothing Congress will act out of character by January 1, 2013, read this report.

On January 1, 2013, America's tax and spending picture changes suddenly and dramatically. Taxes go up by about $400 billion. (The Bush/Obama tax cuts expire, the stimulus tax cuts expire, the payroll tax cuts expire, the business investment tax cuts expire, *and* the health care reform tax increases begin.) Spending goes down by about $100 billion. (The Budget Control Act, which cuts into discretionary spending, coincides with reduced unemployment insurance payments and a sharp drop in Medicare payment rates for physicians.) That's a painful bite for an economy clinging to growth and 8% unemployment.