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Kudlow: Fiscal Cliff Won’t Resolve for Months After Election

Monday, 10 Sep 2012 | 7:43 PM ET

As lawmakers return to Washington after more than a month long recess, investors and voters want to know what they’re going to do about the fiscal cliff.

And from the look of things –it’s nothing.

CNBC’s Larry Kudlow and his Washington colleagues are all hearing that lawmakers won’t attempt to seriously bridge this pressing issue until after the election.

Markets Wrongly Expecting Quick Compromise to Fiscal Cliff?
New research from Jeff Kleintop of LPL Financial shows the market is pricing in a quick outcome to the fiscal cliff but Larry Kudlow insists there's no way a resolution will come quickly.

Considering the fiscal cliff involves complex spending cuts and tax hikes that would take effect early in 2013 – that leaves them precious little time.

And as far as Larry Kudlow can tell - it won't be enough time.

“I can tell you from working in the White House during the Reagan years, you don’t just snap your fingers and get a deal. These things can take months,” said Larry Kudlow. “I can tell you from my experience in politics that they’ll debate and debate. There is no way it resolves quickly.”

That's a serious problem, especially in light of new research from Jeff Kleintop of LPL Financial that shows the market is expecting a quick compromise after the election.

"Remember we didn't see a quick compromise last year when we had to raise the debt ceiling," reminds Kleintop during a live interview on The Kudlow Report. His research suggests the fiscal cliff debate will play out in similar fashion. "It was gridlock then, and it looks like it will be gridlock again."

Despite all these warnings, chatter suggests Dems and the GOP are not going to do anything. That’s even though failing to take action on the issue could very well trigger a recession early next year. Read More: Fiscal Cliff Will Cause Recession, CBO Warns.

Kleintop added that in his view, "I think we slide back into recession. And we could see a pretty serious slide in stocks."

In fact, the negative ripple may have already begun. Corporate leaders have been telling CNBC that already the uncertainty over the issue is affecting key decisions – especially hiring.






Tune in:

"The Kudlow Report" airs weeknights at 7 p.m. ET.

Questions? Comments, send your emails to: lkudlow@kudlow.com

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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"