Economic Freefall

Wednesday, July 18, 2012 - 9:32am

Fed Chairman Ben Bernake warns of economic freefall if Congress doesn't come to an agreement on Bush Tax Cuts.

In Washington today, dire warnings: if Congress doesn't extend the Bush Tax Cuts by the end of the year, the economy could go into freefall. "American people don't deserve to watch this debate come down to last minute," said Senate Majority Leader, Senator Harry Reid, (D-NV).

But it may. The Bush Tax Cuts expire at the end of the year, and Congress must decide whether to extend them. "Everybody who's making $250,000 a year or less, your income taxes will not go up one dime, period," said President Barack Obama.

But Republicans want to include the rich, too - arguing a tax hike on job creators will make things worse. "We've got two wings out there flapping in the American political system and the fuselage is missing," said

A new report from the aerospace industry predicts what they call "employment Armageddon" - two million job losses next year.

Big spending cuts may also kick in if congress doesn't act. "We expect you to act, and act now, and not use it as a political wedge," said Mayor Greg Stanton, (D) Phoenix, AZ.

Former Vice President Dick Cheney told Republicans that could leave the Defense Department unable to deal with sudden threats.

But the biggest concern right now is the economy. Federal Reserve chair Ben Bernanke tells Congress not extending the tax breaks could delay recovery. "It would probably knock the recovery back into a recession and cost a lot of jobs," said Federal Reserve Chairman Ben Bernanke/

He urged lawmakers to not just kick the can down the road, but come up with a real, long-term solution.

Tracie Potts, NBC News.

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