CBO: Deep recession on the way if Congress fails to stop the fiscal cliff

On Wednesday, the Congressional Budget Office issued its latest report, predicting that — unless Congress acts to thwart January’s upcoming “Taxmageddon” — our economy will suffer even further setbacks and likely land squarely back into the realms of recession. …Wait, so they’re saying that… hiking taxes doesn’t necessarily lead to more revenue and actually hinders economic growth and job creation? What the what?

In its most dire warning yet about the fiscal cliff yet, the CBO said the economy would contract by 0.5 percent in calendar year 2013 if the Bush-era tax rates expire and automatic spending cuts are implemented.

Unemployment also would rise from 8.2 percent in 2012 to 9.1 percent next year, it estimates.

The contraction would be very severe in the first half of 2013. CBO sees the economy contracting by 2.9 percent in the first half– deeper than the 1.3 percent negative growth it had seen previously from the fiscal cliff.

The gloomy picture of rising debt and weak economic growth marks CBO’s final major report before the November election. The report is a sharp contrast with the 1.1 percent in growth the CBO projected in January for 2013 and 0.5 percent growth it projected in May.

So tell me something I don’t already know, why don’t you. Oh, and then there’s this lovely little nugget to really cap things off:

Congress’ nonpartisan budget analysts are projecting a $1.1 trillion federal deficit for 2012, the fourth straight year the government’s shortfall will exceed $1 trillion.

If we keep up with our current spending habits, we are well on our way to a Greek-style debt crisis — no if’s, and’s, or but’s about it. I can’t imagine that this is going to do much to help President Obama’s favorite campaign-trail talking point about hiking taxes on America’s wealthiest earners, but then again, you know they’re going to find ways to twist it into more “Republican, obstructionist, hostage-taking Congress!” nonsense — if they bother to talk about it at all, that is. As Jenn Rubin writes:

The Obama team seems convinced that it can win the election on smears and tactics. (Tie Akin to Romney! Holler ‘Bain’!) It is either in denial or oblivious to the fact that actual events — and real things like the economy — may motivate voters. And it seems never to have dawned on the team that it needs concrete policies (e.g., Social Security and Medicare reform) of its own.

It is not even as if the negative attacks are working. The Post reports: “A new Washington Post-ABC News poll shows 41 percent of Americans view the new GOP vice presidential nominee favorably, while 37 percent rate him unfavorably — slightly improved from last week’s polling. … The Obama camp no doubt believes (More cowbell!) it hasn’t run enough attack ads. But maybe, just maybe, the poll numbers reflect voters’ own assessment that Paul Ryan is congenial and talking earnestly about actual policies (e.g., energy, Medicare).

The gap between, on one hand, what is happening in the real world and what voters care about and, on the other, what the Obama camp and much of the media push is as vast as it has even been. In an idealized (or even responsible) journalistic environment, we’d be focused on possible war with Iran (a very real possibility) and the looming recession.