Article Excerpt 
 
 WASHINGTON—The U.S. economy likely would slide into a "significant recession" next year if Congress doesn't avert tax increases and spending cuts set to begin in January, the Congressional Budget Office said Wednesday. 
 
 But if they are postponed for at least a year, the federal government faces the prospect of a fifth straight year with a budget deficit greater than $1 trillion, the CBO said. 
 
 These dueling pressures came into sharp focus as the nonpartisan agency released its final budget and economic forecast ahead of the November elections. 
 
 The fight over how to address tax and spending policies has frozen Washington ... 

 The current unemployment rate is 8.3 percent, according to the Labor Department. | REUTERS CBO: Fiscal cliff equals recession 
 
 A trip over the fiscal cliff would likely send the U.S. economy into a recession in 2013, the Congressional Budget Office said on Wednesday, underscoring the impact that congressional gridlock will have if a deal to prevent scheduled tax hikes and spending cuts cannot be struck by the end of the year. 
 
 Republicans and Democrats so far have found little common ground on how to prevent the so-called fiscal cliff from going into effect at year’s end and have instead been hammering each other over their policy differences in advance of the November elections. 
 
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 CBO on Wednesday spelled out in stark terms the economic impact of inaction. 
 
 If Congress and the White House fail to reach a deal to prevent the tax increases and across-the-board spending cuts that comprise the fiscal cliff, average unemployment would top 9 percent in 2013 and the economy would shrink at an average rate of 0.5 percent over the year, according to CBO’s updated budget and economic projections. 
 
 Unemployment currently is 8.3 percent, according to the Labor Department. 
 
 “The stakes of fiscal policy are very high right now,” CBO Director Douglas Elmendorf told reporters. Elmendorf estimated that the difference between preventing the fiscal cliff and letting it to go into effect would amount to 2 million jobs in 2013. 
 
 Most of the economic damage caused by congressional inaction would occur in the first half of 2013. CBO projects that the economy, as measured by gross domestic product, would shrink at an annual rate of 2.9 percent during the first six months of 2013 and then rebound to grow at a rate of 1.9 percent for the remainder of the year. 
 
 CBO estimates that the economy will have grown at an annual rate of 2.1 percent in 2012. 
 
 Elmendorf made clear there is a price to Congress dragging its feet over what to do about the fiscal cliff and said the sooner the issue can be resolved the better it will be for the economy. 
 
 “We think that economic growth right now is being held back by this anticipation of fiscal tightening,” he said. 
 
 The release of the report set off a round of finger pointing among Democrats and Republicans over who is to blame for a failure to compromise over tax and spending differences.
– Don't expect a gentle fall if the US goes over the so-called "fiscal cliff." The Congressional Budget Office has concluded in a report today that if Congress doesn't do something about the impending round of tax hikes and spending cuts, US growth will plunge back into recession territory. By its estimate, economic growth would decline 0.5% in fiscal 2013, while unemployment would rise to 9%, according to the Wall Street Journal. “The stakes of fiscal policy are very high right now,” says CBO's director. The economy as measured by GDP would drop off by 2.9% in the first six months of 2013, notes Politico, then grow to 1.9%. The upside: The tax hikes and spending cuts slated for the end of the year would also shrink the budget deficit, bringing it down to $641 billion, or 4% of GDP. The report also brings better-than-expected news about fiscal 2012, which ends in September: Unemployment currently at 8.2%, compared to the 8.8% predicted in January, and the deficit is at $1.1 trillion, a hair lower than the projected $1.2 trillion.