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The Fiscal Cliff and US Foreign Policy

PRINCETON – 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 January 1 is very real. Global markets are well aware of the danger of the United States falling over the “fiscal cliff,” and are watching nervously. They know that this outcome could well throw the US – and the world – back into recession.

Foreign ministries around the world should be equally nervous. 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.