Every nation is balanced on fiscal cliff

Stagnation over the US budget in Congress will have far-reaching consequences, writes Anne-Marie Slaughter

THE world should be worried. The possibility that US President Barack Obama and the Republicans in Congress will fail to reach a compromise before mandatory deep spending cuts and tax increases take effect on Jan 1 is very real.

Global markets are well aware of the danger of the US falling over the “fiscal cliff”, and are watching nervously. They know this outcome could throw the US — and the world — back into recession. Unless the US can get its fiscal house in order, it will be forced to abdicate leadership on a wide range of critical global issues.