It has been a week of warnings for Congress, which was put on notice repeatedly in recent days that a failure to address important questions about taxation and spending could be disastrous.
The warnings began early in the week, when the nonpartisan Congressional Budget Office said that gridlock on Capitol Hill could slow the economy’s growth and trigger a recession if automatic spending cuts and tax increases set to take effect in January and worth $607 billion are not addressed.
The dire predictions were echoed on Sunday by U.S. Defense Secretary Leon Panetta, who said on ABC’s This Week that the automatic cuts in military spending if budgets talks break down would be “disastrous in terms of our national defense.’’
“I think what both Republicans and Democrats need to do and the leaders on both sides is to recognize that if sequester takes place, it would be disastrous for our national defense and very frankly for a lot of very important domestic programs,” he said.
Warnings also came on Sunday from Erskine Bowles, co-chairman of the Simpson-Bowles commission empaneled by President Obama to seek fiscal solutions, who called for Congress to grapple with the expiring tax and budget cuts during the lame duck session this winter. The spending cuts and tax code reforms recommended by the commission following the 2008 financial crisis were never implemented.
“If we don't, then I think you will see the markets really take a really adverse look at the country," Bowles, a chief of staff to former President Bill Clinton, said on CNN’s Fareed Zakaria GPS. "And I think you'll see us lose another downgrade in our credit. And I think you'll see interest rates pop up. And before long, you'll see the availability of credit lessen. So I think we could have a real problem if we don't do something and do something relatively quick.”