If U.S. lawmakers fail on a number of budget, debt and tax issues, Asian powers like China are ready to take a larger role in global economic affairs.
World leaders are fixed on Europe, eager for clues about how the European Union's ongoing economic crisis will affect their nations' interests. But attention soon will shift to Washington, warns World Bank Chairman Robert Zoellick.
Sources say U.S. lawmakers and the White House are quietly talking about ways to avoid a so-called "Taxmageddon" at the end of this year. If Congress fails to pass several pieces of legislation, payroll tax cuts and George W. Bush-era income tax reductions will expire and $1.2 trillion in across-the-board federal spending cuts will be triggered. The Congressional Budget Office has said the cumulative effect would be a 1.3 percent contraction of the U.S. economy.
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That sounds dire, and many in Washington are pessimistic that this bitterly partisan Congress can avoid a crisis at the end of the year.
But what if lawmakers pull it off?
"The U.S. is one budget deal away from restoring its global standing," Zoellick told a forum Wednesday in Washington.
The World Bank chief is one of the world's most plugged-in leaders. He shared a cautionary tale Wednesday?apparently referring to America's top peer competitor, China?from his travels to Asia.
Behind closed doors, senior Asian leaders warn: "There are powerful nations here who say, 'The Americans can't handle this?and [after] you better listen to what we have to say'."
John T. Bennett covers national security and foreign policy for U.S. News & World Report. You can contact him at jbennett@usnews.com or follow him on Twitter.
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