Study shows Obama tax plan bad news for the economy — especially in blue states

Two months ago, the Congressional Budget Office issued a stark warning
to Congress over the fiscal impact of “Taxmageddon,” the upcoming
expiration of the Bush-era tax rates at the end of this year. Allowing
all of the tax rates to rise would push the US into recession:

Tax hikes and spending cuts set to take effect in January
would suck $607 billion out of the economy next year, plunging the
nation at least briefly back into recession, the nonpartisan
Congressional Budget Office said Tuesday.

Unless lawmakers act, the economy is likely to contract in the first
half of 2013 at an annualized rate of 1.3 percent, the CBO said, before
returning to 2.3 percent growth later in the year.

Canceling those tax and spending policies would protect the recovery
in the short run and encourage more vibrant growth, around 4.4 percent,
in 2013, the CBO said. However, unless lawmakers adopt policies that
would reduce budget deficits by a comparable amount down the road, the
CBO said, the national debt would continue to climb, imperiling future
economic growth.

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