Alan Blinder, former vice chairman of the Federal Reserve, and co-author of a very popular Economics college textbook, believes that although the fiscal cliff was serious, the “debt ceiling is scarier.” Allowing the economy to go over the fiscal cliff would have resulted in a 4.5 percent contraction of GDP. The upcoming debt ceiling impasse could shrink GDP by more than 6 percent, force a 26 percent reduction in government spending, and a “swift descent into recession.” Blinder said that “At current rates of spending and taxation, federal receipts cover less than 74 percent of federal outlays.” (Wall Street Journal, The Debt Ceiling is Scarier than the Fiscal Cliff, January 14, 2013)
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