Analysis: As worst euro fears fade, U.S. fiscal cliff looms
(Reuters) - The euro zone has stepped back from the brink of disaster for now, but the global economy could soon be staring into another abyss if U.S. politicians fail to head off $600 billion in automatic austerity that all but guarantees a new recession.
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Now, exactly six weeks before the U.S. general election, fiscal gridlock in Washington is coming back on the global economy's risk radar.
If opinion polls hold steady and prove accurate, President Barack Obama, a Democrat, will defeat Republican Mitt Romney on November 6. The House of Representatives is likely to stay in the hands of the Republicans, who have a chance of seizing control of the Senate.
On the surface, with power split, that could make it harder to avert $600 billion in spending reductions and expiring tax cuts, equal to 4 percent of gross domestic product, that will kick in at the start of 2013 unless a deal is struck to shrink the U.S. budget deficit by at least $1.2 trillion over the next decade.