"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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The footie is back. Three weeks in and what have we learned so far?

Barcleys, boots and big names... the Prem is back.

Another season, another reason for making whoopee cushions and giving them to Spurs fans to cheer them up during the long winter afternoons ahead. What have we learned so far?

Big names are vital. Just ask the manager of the Man United shop. The arrival of Schneiderlin and Schweinsteiger has done wonders for the sale of repro tops and they’ve run out of letters. Benedict Cumberbatch, please join Carlisle United. They’re desperate for some extra income.

Beards are still in. The whole Prem is bristling with them, the skinniest, weediest player convinced he’s Andrea Pirlo. Even my young friend and neighbour Ed Miliband has grown a beard, according to his holiday snaps. Sign him.

Boots Not always had my best specs on, but here and abroad I detect a new form of bootee creeping in – slightly higher on the ankle, not heavy-plated as in the old days but very light, probably made from the bums of newborn babies.

Barclays Still driving me mad. Now it’s screaming from the perimeter boards that it’s “Championing the true Spirit of the Game”. What the hell does that mean? Thank God this is its last season as proud sponsor of the Prem.

Pitches Some groundsmen have clearly been on the weeds. How else can you explain the Stoke pitch suddenly having concentric circles, while Southampton and Portsmouth have acquired tartan stripes? Go easy on the mowers, chaps. Footballers find it hard enough to pass in straight lines.

Strips Have you seen the Everton third kit top? Like a cheap market-stall T-shirt, but the colour, my dears, the colour is gorgeous – it’s Thames green. Yes, the very same we painted our front door back in the Seventies. The whole street copied, then le toot middle classes everywhere.

Scott Spedding Which international team do you think he plays for? I switched on the telly to find it was rugby, heard his name and thought, goodo, must be Scotland, come on, Scotland. Turned out to be the England-France game. Hmm, must be a member of that famous Cumbrian family, the Speddings from Mirehouse, where Tennyson imagined King Arthur’s Excalibur coming out the lake. Blow me, Scott Spedding turns out to be a Frenchman. Though he only acquired French citizenship last year, having been born and bred in South Africa. What’s in a name, eh?

Footballers are just so last season. Wayne Rooney and Harry Kane can’t score. The really good ones won’t come here – all we get is the crocks, the elderly, the bench-warmers, yet still we look to them to be our saviour. Oh my God, let’s hope we sign Falcao, he’s a genius, will make all the difference, so prayed all the Man United fans. Hold on: Chelsea fans. I’ve forgotten now where he went. They seek him here, they seek him there, is he alive or on the stairs, who feckin’ cares?

John Stones of Everton – brilliant season so far, now he is a genius, the solution to all of Chelsea’s problems, the heir to John Terry, captain of England for decades. Once he gets out of short trousers and learns to tie his own laces . . .

Managers are the real interest. So refreshing to have three young British managers in the Prem – Alex Neil at Norwich (34), Eddie Howe at Bournemouth (37) and that old hand at Swansea, Garry Monk, (36). Young Master Howe looks like a ball boy. Or a tea boy.

Mourinho is, of course, the main attraction. He has given us the best start to any of his seasons on this planet. Can you ever take your eyes off him? That handsome hooded look, that sarcastic sneer, the imperious hand in the air – and in his hair – all those languages, he’s so clearly brilliant, and yet, like many clever people, often lacking in common sense. How could he come down so heavily on Eva Carneiro, his Chelsea doctor? Just because you’re losing? Yes, José has been the best fun so far – plus Chelsea’s poor start. God, please don’t let him fall out with Abramovich. José, we need you.

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 27 August 2015 issue of the New Statesman, Isis and the new barbarism