Reuters - Video

EDITION: U.S. | U.K. | IN

Video

Deal or no deal, U.S. feels pain

Friday, December 28, 2012 - 02:32

Dec. 28 - Whether Washington delivers a scaled-down tax and spending plan, a retroactive one or none at all, the U.S. economy will not emerge unscathed. Jeanne Yurman reports.

▲ Hide Transcript

View Transcript

Global markets and U.S. businesses and taxpayers are cracking their collective knuckles to see what or if a deal on the 'fiscal cliff' emerges from Washington. What politicians agree to by December 31st - or don't - about expiring tax laws and automatic spending cuts will impact the economy. The only question: will it be a mild bruising or a full on body blow? Taking a look at three broad scenarios: Congress and the White House could deliver a scaled back plan. Economist Bricklin Dwyer of BNP Paribas calls it patchwork: SOUNDBITE: BRICKLIN DWYER, ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "Patchwork means we get no certainty beyond say six months or so. Patchwork means you mean you may get a temporary extension of things like emergency unemployment benefits but nothing permanent, nothing to establish certainty on the investment outlook on what's going to happen to your taxes at the end of the year and perhaps next year." That uncertainty has already taken a toll on consumer confidence and spending. Brian Kessler at Moody's Analytics. SOUNDBITE: BRIAN KESSLER, ECONOMIST, MOODY'S ANALYTICS (ENGLISH) SAYING: "Rather than a fiscal cliff were looking at more like a fiscal slope and that's something that gradually starts, probably has already started and gradually phases in over the course of the next month or maybe two." Another scenario: no deal is reached. Taxes go up but Congress passes legislation to retroactively claw back tax rates sometime next month. In this case, small businesses, representing half of all private sector employees, get slammed. SOUNDBITE: BRICKLIN DWYER, ECONOMIST, BNP PARIBAS (ENGLISH) SAYING: "You know operating systems are not set up to handle these fluctuations in tax rates. So it will get very messy. It will dampen confidence and it will strike a reality in consumers that their taxes may go up, maybe not today as they did yesterday, they reverted but they may be going up tomorrow. So that reality will dampen their expectations and also limit their ability to borrow and consume." And last, though Marc Chandler of Brown Brothers Harriman says unlikely, is no deal. MARC CHANDLER, GLOBAL HEAD OF CURRENCY, BROWN BROTHERS HARRIMAN "If we go over the cliff sort of full monty then it could drive the U.S. economy into recession especially in the first half of the year." Prospects for any agreement before the 31st are dwindling. Odds now lean toward the new Congress seeking a retroactive fix.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Deal or no deal, U.S. feels pain

Friday, December 28, 2012 - 02:32

Top News »

Most Popular »

Investing 201 »

Bond investors brace for the end of Fed stimulus Bond investors brace for the end of Fed...

Fri, Oct 10, 2014 - (4:03)

Arian Foster = BlackBerry? Arian Foster = BlackBerry?

Fri, Oct 25, 2013 - (3:16)

Don’t miss these red flags for IPOs Don’t miss these red flags for IPOs

Thu, Oct 10, 2013 - (2:34)

Copycat currency trading Copycat currency trading

Wed, Oct 02, 2013 - (2:28)

When to dump a winner When to dump a winner

Tue, Sep 24, 2013 - (1:55)

Where gold might again attract Jim Rogers Where gold might again attract Jim Rogers

Thu, Sep 19, 2013 - (2:05)

Why savings interest rates won't budge Why savings interest rates won't budge

Fri, Sep 13, 2013 - (2:09)

Buy local? ETFs try the trend Buy local? ETFs try the trend

Thu, Sep 05, 2013 - (2:42)

Money Clip »

Will Apple Pay transform mobile payments? Will Apple Pay transform mobile payments?

Thu, Oct 16, 2014 - (2:45)

3 things to do before disaster strikes 3 things to do before disaster strikes

Wed, Sep 18, 2013 - (1:39)

Your must-do money list Your must-do money list

Wed, Sep 11, 2013 - (1:24)

The worst "best" financial advice The worst "best" financial advice

Wed, Sep 04, 2013 - (1:42)

Forget gold: The case for REITs Forget gold: The case for REITs

Fri, Apr 26, 2013 - (1:19)

3 rules for buying a house now 3 rules for buying a house now

Thu, Apr 18, 2013 - (1:39)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Dance of the northern lights Dance of the northern lights

Mon, Oct 20, 2014 - (1:08)

Images of September Images of September

Wed, Oct 01, 2014 - (1:00)

Still missing – MH370 Still missing – MH370

Fri, Sep 05, 2014 - (2:05)

Burning Together Burning Together

Mon, Sep 01, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)