Simpson-Bowles: It’s Back, and Better Than Ever

June 15 (Bloomberg) -- Whoever wins the U.S. presidency inNovember will potentially have to deal with combined taxincreases and spending cuts that could extract 3 percent to 4percent of gross domestic product from the economy -- apotentially catastrophic fiscal blow to the recovery from thedeepest recession in 80 years.

The U.S. faces a reckoning at year’s end. The Bush-era taxcuts are scheduled to expire, resulting in huge tax increasesfor almost all taxpayers, not just the rich. Cuts in domesticspending, particularly on defense, could automatically takeeffect. The federal debt ceiling once again will bump up againstlegal borrowing limits. And the elections may narrow eachparty’s majority in Congress, making compromise more difficultin 2013. There is little leeway to “kick the can down the road.”