Just days out from the fiscal cliff, Rep. John Boehner, R-Ohio, failed in his last ditch effort to get enough members of the House of Representatives to agree to a plan to pass tax-cut extensions for the majority of Americans making under $1 million, according to The Washington Post.
With the fiscal cliff – a series of automatic tax cuts and spending cuts – now becoming more of an expected threat, it potentially spells bad news for the housing recovery. Moody's Investors Service warned this week that going over the cliff is tantamount to causing a recession in 2013 due to the likely effects of policy tightening and the negative impact on the securitization market.
Pimco CEO Mohamed El-Erian urged Congress earlier in the year to focus on the cliff and to ensure it does not impact improvements in the housing market.
"At the root of the global financial crisis, the troubled U.S. housing market continues to act as a millstone around the economy's neck," El-Erian wrote. "The longer the problems persist, the greater the pressure on consumer and business sentiment, and the harder it is for the unemployed to find and relocate to new job opportunities."