"Fiscal cliff" threatens not only U.S. but world economy (2)

If politicians in Washington fail to solve the crisis once and for all by the end of the year, then higher tax rates and across-the-board spending cuts in federal programs would be initiated automatically as the new year begins.

The potential failure, according to U.S. analysts, may plunge the country into another recession and growth for 2013 would be minus 0.5 percent instead of the 2 percent predicted by economists.

According to official estimate, unemployment in 2013 will probably exceed 9 percent, the highest in over two decades, if the world's largest economy falls off the "cliff."

Moreover, the fiscal troubles will surely whittle down foreign investor confidence in the U.S. economy.

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