Even before he takes the oath of office for a second time, President Barack Obama has a crisis on his hands.
On Jan. 2, 2013, America will begin a long fall off the "fiscal cliff" -- unless the White House and Congress can agree on a deal to avert the plunge.
And that's not going to be easy.
"It's going to be tough to govern" with Congress still split and the Republican majority in the House intact, noted CNN political contributor David Gergen, who urged the president to heed the words of Winston Churchill: "In victory, magnanimity."
Beyond the domestic agenda, the global economic slowdown threatens an anemic U.S. recovery -- while Iran's nuclear program and Syria's implosion will also demand urgent attention after the rigors of the campaign trail.
The in-tray may not seem as daunting as the one that greeted Obama on his first day in office in 2009, but he'll have little time to savor his latest victory.
In fewer than 60 days, arbitrary spending cuts and tax increases will begin to kick in unless the president and Congress -- half of which is still controlled by the Republicans -- can find a better way to manage debt reduction.
The challenge for Obama and the divided Congress is to come up with a credible consensus that tackles the deficit and doesn't smother the fragile roots of recovery.
The Tax Policy Center estimates that allowing the Bush-era tax cuts to expire means an average tax increase of almost $2,000 for middle-class Americans. Sucking that much money out of circulation could push unemployment above 9 percent, according to the Congressional Budget Office.
Obama has declared that the estimated $109 billion worth of automatic budget cuts to defense spending, social services, education and other discretionary federal spending won't happen. And White House officials -- but not the president himself -- say he will preserve the Bush-era tax cuts for the middle class but veto any bill that extends the cuts for households with incomes over $250,000.
The expiration of those tax cuts would raise some $500 billion in revenues, according to the latest CBO data.
If the United States doesn't address the impending fiscal cliff, ratings agency Moody's has warned of a further downgrading of U.S. sovereign debt.
Foreign governments are watching the situation with trepidation. Sustaining the U.S. recovery is vital to the health of the global economy -- with most of Europe mired in recession, Japan facing its own version of the fiscal cliff -- its public debt is twice the size of its $5 trillion economy -- and growth in China slackening, though most countries would love to have its 7 percent expansion rate.
Deferring judgment day
Now that the hyper-partisan presidential campaign is out of the way, there may be a window for compromise. But with Congress due to be in session for only 16 more days in 2012, that may extend only as far as a deal to kick the can down the road once more -- resulting in a Band-Aid rather than a grand bargain.
House Speaker John Boehner told CNN last weekend that was the most likely path.
"I think the best you can hope for is some kind of bridge," he said. Boehner and other Republicans have demanded spending cuts and other measures that would exceed any increase in the federal borrowing ceiling.
Deferring the day of judgment is unlikely to impress the markets. Nor will another bout of protracted wrangling over raising the debt ceiling, something that will likely become necessary early in the new year.
In September, Moody's indicated it would downgrade the U.S. sovereign rating from its "AAA" rating without "specific policies that produce a stabilization and then downward trend in the ratio of federal debt to GDP over the medium term." Standard & Poor's downgraded the U.S. rating in 2011 after the first bout over the debt ceiling.
And as more baby boomers begin retiring and adding to the burden on Medicare and Social Security, it won't be long before entitlement programs come under even greater pressure.
Meeting in Mexico over the weekend, G-20 finance ministers cited the U.S. fiscal cliff as the biggest risk to global growth. Canadian Finance Minister Jim Flaherty warned of "dire consequences" if it's not tackled.
If the fiscal cliff is the most immediate problem, the consequences of a eurozone break-up could be equally as damaging. The G-20 ministers voiced concerns about the "complex implementation" of much-needed reforms.
The potential for the events in Europe to add to the president's woes is probably underestimated because that situation seems interminable and impossible to unravel. It's only been a month since the International Monetary Fund warned of "a downward spiral of capital flight, breakup fears and economic decline" in Europe.
Given that EU-U.S. trade was worth $636 billion in 2011 and U.S. investment in the EU was about $150 billion, Europe's economic health is hardly marginal to America.
The European Union has averted imminent crisis by putting the European Central Bank on steroids, allowing it to use massive financial firepower to buy the bonds of troubled members. But Spain is not yet ready to accept bailout terms, Greece is already dangling off a fiscal cliff and several of Europe's largest economies are either in or on the edge of recession.