Business Insider has compiled a nice collection of analyst opinions and ideas regarding the coming fiscal cliff. Currently, the estimates for the hit to GDP are wide ranging with some analysts predicting as much as a 5% hit to GDP. But according to Goldman Sachs and Business Insider we’re likely to get an agreement that extends much of the spending. Business Insider reports:
A short-term resolution, with an expectation of a longer-term resolution.
- A compromise on these policies before the year-end is likely to be very difficult and officials could instead choose a short-term extension of about 3 to 6 months.
- This extension could be made with the understanding that the next such extension would have to involve more fundamental fiscal reforms.
- “In essence, this would extend most of the ‘fiscal cliff’ policies into mid-2013, with the expectation that by that point a broader reform package could be developed and agreed to.”
- “In theory, the same logic that supports a temporary extension could apply to a full-year extension, but is it likely easier for opponents of certain policies to accept a short-term ‘patch’ than a one year or longer extension. For example, House Republicans accepted a short-term extension of unemployment benefits in December 2011, even though they had been unwilling to accept a one-year extension without eligibility reductions.” – Goldman Sachs.