The US can try to avoid the worst outcomes. Economic officials can coax their counterparts in Europe toward new rescue plans. The Federal Reserve could pursue monetary easing alongside other central banks, to stave off global recession or deflationary pressures.
Domestically, Obama and Congress could try to extend many of the expiring tax cuts, leaving long-term decisions on deficit reduction for after the elections.
Around February 2013, the federal government is also scheduled to run up against a borrowing limit imposed by Congress. So the tax and spending choices could occur against a backdrop of worry about the Treasury's ability to fund government operations. Many Republicans say the debt ceiling should be raised only if big federal spending cuts are enacted.
