"Fiscal cliff" could knock 6.5% off America's Q1 and Q2 annualised growth

"Taxmaggedon" would hit in January

The American Congressional Budget Office (the inspiration for our own Office of Budget Responsibility) has released a report warning that the impact of the upcoming "fiscal cliff" would be to wipe 4 per cent from GDP growth for 2013.

The fiscal cliff – a phrase coined by federal reserve chairman Ben Bernanke – is the result of a series of several major budget provisions all expiring at once, at the same time as some of the automatic cuts negotiated as part of the debt ceiling crisis last summer come into effect, and several tax cuts time out. More broadly, though, it is the result of America's frankly broken political system.

In March, Congress failed to pass two potential measures which would have ended the crisis:

The first, a bipartisan bill which has the most chance of passing in the Democrat-controlled Senate, was defeated 382-38; the second, the White House's preferred option, was unanimously rejected 414 to 0.

If something is not passed by the time the various provisions expire, on 31 December, then the CBO estimates that:

Those policies will reduce the federal budget deficit by $607 billion, or 4.0 percent of gross domestic product (GDP), between fiscal years 2012 and 2013. The resulting weakening of the economy will lower taxable incomes and raise unemployment, generating a reduction in tax revenues and an increase in spending on such items as unemployment insurance. With that economic feedback incorporated, the deficit will drop by $560 billion between fiscal years 2012 and 2013, CBO projects.

If all the fiscal blows are deflected, the economy should grow by 5.3 per cent (annualised) in the first half of next year. If they aren't, it will instead contract by 1.3 per cent.

The coming showdown has been compared by many to the debt ceiling crisis, when Congress hit deadlock last summer over a budgetary provision which would have caused America to default on its debt, but in many ways, it is more dangerous still. The debt ceiling itself will reenter the political battleground in spring of 2013, and the Republican leader John Boehner is signalling that he will play hardball over the issue. Then there's the fact that the deal will be happening shortly after the presidential election so there is no incentive for dealmaking to start until November; both parties' incentives will differ greatly depending on who will be inheriting the mess.

Related, Joe Weisenthal suggests the most apocalyptic scenario possible:

It's very easy to imagine Romney winning the popular vote and Barack Obama winning the electoral college. In fact, the electoral college map is VERY favorable to Obama. This scenario is definitely possible and it would be the fiscal cliff Black Swan.

If you thought Congressional Republicans were going to be intransigent on the debt ceiling, multiply that by 10x. Any goodwill would be dead as the Republicans would feel a mandate based on the desires of the majority of the people, and Obama would be weak.

It would be NUTS!

Republican Speaker John Boehner. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Xenophobic graffiti at a London Polish centre is a dark sign of post-Brexit Britain

The centre's chairwoman says an incident of this kind has never happened before, and police are treating it as a hate crime. 

Early on Sunday morning, staff arriving at the Polish Social and Cultural (POSK) centre in west London's leafy Ravenscourt Park were met with a nasty shock: a xenophobic obscenity smeared across the front of the building in bright yellow paint. 

“It was a standard, unpleasant way of saying ‘go away’ – I'll leave that to your interpretation,” Joanna Mludzinska, chairwoman of the centre, says the next morning as news crews buzz around the centre’s foyer. The message was cleaned off as soon as the staff took photo evidence – “we didn’t want people to walk down and be confronted by it” – but the sting of an unprecedented attack on the centre hasn’t abated.

“Nothing like this has ever happened before,” Mludzinska tells me, shaking her head. “Never.”

The news comes as part of a wash of social media posts and police reports of xenophobic and racist attacks since Friday’s referendum result. It’s of course difficult to pin down the motivation for specific acts, but many of these reports feature Brits telling others to “leave” or “get out” – which strongly implies that they are linked to the public's decision on Friday to leave the European Union. 

Hammersmith and Fulham, the voting area where the centre is based, voted by a 40-point margin to remain in the UK, which meant the attack was particularly unexpected. “The police are treating this as a one-off, which we hope it is,” Mludzinska tells me. They are currently investigating the incident as a hate crime. 

“But we have anecdotal evidence of more personal things happening outside London. They’ve received messages calling them vermin, scum [in Huntingdon, Cambridgeshire]. It’s very frightening.” As one local Polish woman told the Mirror, there are fears that the referendum has “let an evil genie out of a bottle”. 

For those unsure whether they will even be able to stay in Britain post-referendum, the attacks are particularly distressing, as they imply that the decision to leave was, in part, motivated by hatred of non-British citizens. 

Ironically, it is looking more and more likely that we might preserve free movement within the EU even if we leave it; Brexit campaigners including Boris Johnson are now claiming immigration and anti-European feeling were not a central part of the campaign. For those perpetrating the attacks, though, it's obvious that they were: “Clearly, these kind of people think all the foreigners should go tomorrow, end of,” Mludzinska says.

She believes politicians must make clear quickly that Europeans and other groups are welcome in the UK: “We need reassurance to the EU communities that they’re not going to be thrown out and they are welcome. That’s certainly my message to the Polish community – don’t feel that all English people are against you, it’s not the case.” 

When I note that the attack must have been very depressing, Mludzinska corrects me, gesturing at the vases of flowers dotted around the foyer: “It’s depressing, but also heartening. We’ve received lots and lots of messages and flowers from English people who are not afraid to say I’m sorry, I apologise that people are saying things like that. It’s a very British, very wonderful thing.”

Beyond Hammersmith

Labour MP Jess Phillips has submitted a parliamentary question on how many racist and xenophobic attacks took place this weekend, compared to the weekends preceding the result. Until this is answered, though, we only have anecdotal evidence of the rise of hate crime over the past few days. From social media and police reports, it seems clear that the abuse has been directed at Europeans and other minorities alike. 

Twitter users are sending out reports of incidents like those listed below under the hashtag #PostBrexitRacism:

Facebook users have also collated reports in an album titled Worrying Signs:

Police are currently investigating mutiple hate crime reports. If you see or experience anything like this yourself, you should report it to police (including the British Transport Police, who have a direct text number to report abuse, 61016) or the charity Stop Hate UK.

HOPE not hate, an advocacy group that campaigns against racism in elections, has released a statement on the upsurge of hatred” post-referendum, calling on the government to give reassurance to these communities and on police to bring the full force of the law” to bear against perpetrators.

The group notes that the referendum, cannot be a green light for racism and xenophobic attacks. Such an outpouring of hate is both despicable and wrong.

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.