With lawmakers returning to Washington after their summer recess, it doesn’t look like they’re very serious about tackling the so-called fiscal cliff in time to avert it.
CNBC’s Larry Kudlow and his colleagues in the nation’s capital are hearing that lawmakers won’t make an effort to fix the issue until after the election.
Taking into account the complexities of the spending cuts and the tax hikes that are due to take effect early next year, that scarcely leave them enough time.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
“I can tell you from working in the White House during the Reagan years, you don’t just snap your fingers and get a deal,” Kudlow said. “These things can take months. They’ll debate and debate. There is no way it resolves quickly.”
Research from Jeff Kleintop of LPL Financial suggests the fiscal cliff debate will bog down in gridlock, much like the debt-ceiling debate last summer that caused markets to slide amid falling confidence.
"[W]e didn't see a quick compromise last year when we had to raise the debt ceiling," Kleintop told CNBC’s The Kudlow Report. "It was gridlock then, and it looks like it will be gridlock again."
Democrats and Republicans don’t seem to be in a hurry to deal with the issue, despite a prediction from the Congressional Budget Office that failure to bridge their differences over the impasse will probably lead to a recession next year.
"I think we slide back into recession,” Kleintop said. “And we could see a pretty serious slide in stocks."
Martin Regalia, the U.S. Chamber of Commerce’s top economist, believes the economy will fall into another recession if the Obama administration and Congress can’t agree on a way to avert the fiscal cliff, CNNMoney reported.
"If we don't figure out a way to finesse this fiscal cliff … if we don't figure out how to kick this can down the road, we will almost certainly be in a recession," said Regalia.
The Chamber of Commerce wants lawmakers to delay the cuts and tax hikes until lawmakers can reach a big deficit-cutting agreement in a "in a somewhat less-heated environment," Regalia said, according to CNNMoney.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
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