Notable names like Fed chief Ben Bernanke and PIMCO CEO Mohamed El-Erian are sounding off about how bad the economy could become in early 2013 when Congress faces the expiration of the Bush tax cuts, steep spending cuts and the end of the payroll tax holiday.
Amitai Etzioni, a professor of international relations and director of the Institute for Communitarian Policy Studies at George Washington University, is worried Congress and Americans will ignore the warnings of Bernanke and El-Erian. He also fears Congress and the President don't have enough political capital or clout between parties to save America from the economic cliff.
"The alarm should concern anyone who cares about our democratic system," Etzioni wrote on CNN. "The reason we are getting awfully close to the edge is because the Democrats and Republicans are inclined to pull the steering wheel in opposite directions. Granted, alarms are often sounded, but as we shall see shortly, this time there are strong reasons to fear that our gridlocked political system will prevent us from responding before we go over the edge."
Either way, Etzioni sees pain. There will be pain if tax cuts are extended without spending cuts. And, he suggests there will be pain if the Bush cuts and payroll holiday are not extended and Congress cuts spending, creating a drag on the economy. He says a steep decline would lead to a 3.5% or 5% reduction in economic growth and a serious recession.
Click here to read Etzioni's full article.