The U.S. economy will battle a perfect storm in 2013, as three events collide into one huge super cell that could wipe out what little recovery has occurred to now, says Peter Orszag, the vice chairman of global banking at Citigroup.
Congress by early 2013 must address crucial legislation on the Bush-era tax cuts, defense spending and raising the debt ceiling again.
Considering how difficult it was to raise the debt ceiling in 2011, marked by political brinkmanship and a downgrade in U.S. credit ratings, the triple threat could prove daunting.
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"It's going to be rare that we have that [legislative] trifecta where you can actually do anything," Orszag says, arguing that one political party needs to control the White House, the House of Representatives, and at least 60 seats in the Senate to push its agenda through, according to Business Insider.
That's unlikely.
"I think that the central political problem of the next decade is the split model," of partisan politics, Orszag says.
"I think it's fundamentally broken and I don't think it will work...We need to look for more automatic mechanisms so that legislative gridlock doesn't lead to these harsh moments like we saw last summer."
Other noted economists have pointed out the global economy, and not just the United States, facees a perfect storm in 2013, including New York University economist Nouriel Roubini, who shot to fame by predicting the housing bust and ensuring global recession years before they happened.
Roubini predicts a good chance of a Chinese hard landing, a U.S. double-dip recession and a European meltdown by 2013.
Governments around the world have taken stop-gap measures to plug holes in their debt-ridden economies without making fundamental reforms needed for lasting recovery, Roubini tells The Globe and Mail.
When asked the likelihood of a perfect storm, Roubini says "close to 50 percent, unless the world changes its economic policies. But it's a 2013 or 14 or 15 story, not 2012. Because all the players for now are kicking the can down the road."
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