Economist Warns ‘Tough’ Year Ahead Without Deficit Deal

A top economist warned Sunday that failure by the deficit committee to reach a deal tees up a year of potential turmoil that could rattle the financial markets and the economy.

Moody’s chief economist Mark Zandi told “Fox News Sunday” it looks like the so-called Super Committee will not achieve its goal of submitting by Wednesday a $1.2 trillion deficit-reduction plan.

In the near-term, he predicted the markets would not revolt, because Wall Street’s expectations for the congressional panel were so low to begin with.

But there’s trouble ahead, Zandi warned.

“2012 is shaping up to be a very, very tough year,” Zandi said. “And in large part it’s because the Super Committee decided to punt, or at least at this point it appears that they’ve decided to punt.”

Without a Super Committee proposal, Congress still has no plan for addressing a host of benefits set to expire at the end of the year. They include unemployment aid and a payroll tax cut.

“Everybody’s taxes are going to go up on January 1,” Zandi said, adding that the hit could cut into economic growth…

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UpdateHow Democrats Killed The Super Committee, at SayAnythingBlog.

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