Can Congress agree on a budget in time to prevent economic calamity?

POSTED: Wednesday, July 18, 2012 - 6:00pm

UPDATED: Wednesday, July 18, 2012 - 6:04pm

The standoff over taxes and spending in washington is having a very real bottom-line effect on the U.S. economy according to Treasury Secretary Timothy Geithner.

Republicans and Democrats on Capitol Hill are facing what's been described as a "fiscal cliff" at the end of the year, and there's no sign of compromise on a budget.

Geithner says the uncertainty is threatening to stall the economy.

"It's stuck and it needs to get unstuck. The most powerful instruments of economic policy that the country needs right now are in the hands of the Congress," he says.

If Congress can't find compromises before December 31st the Bush-era tax cuts expire for every American and $115 billion in automatic defense and domestic spending cuts kick in.

Federal reserve chairman ben bernanke says it could be a devastating one-two punch.

"If that all happens, no doubt it will do serious damage to recovery and cost a significant number of jobs," he says.

In the defense industry alone 100,000 jobs could be lost.

"We are unable to reliably estimate how many employees are going to lose their jobs and how many families are going to be disrupted," Lockheed Martin CEO Robert Stevens told Congress.

While the White House is telling Congress to find a solution, Congress is already preparing for the worst.

The House voted to force the White House budget office to start drawing up a report outlining the cuts it will make on January 1st.

If there's any pulling back from the fiscal cliff, it looks like it will be after the election.

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