Politics Pose Greatest Threat to Economic Growth

As of the present moment in time, the U.S. economy is expected to grow only about 2 percent this year and 2.3 percent next year. Since the International Monetary Fund (IMF) reported their annual outlooks in April, both figures above have already dropped by 0.1 percent.

Despite cutting the global growth forecast, the IMF is actually keeping their latest outlook in mind from an optimistic viewpoint; anticipating U.S. officials to be more proactive in agreeing upon and acting on fiscal policy changes that will be able to keep our economy afloat and that euro governments will follow through with some proposals that will reform and stabilize the currency union.

If politicians in both America and Europe neglect to focus on the big picture of our global economy and get lost in some of the more trite political details, we'll have some big burdens to bear in the next few years with the bulk of the problem beginning after policy changes scheduled to go into effect January 1, 2013.

Quicker action and longer-term planning are two key factors our leaders must hone in on when combating the fiscal crises at hand.

From CNNMoney.

"The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis," the IMF report states.

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The other main threat to global economic growth is in the United States, according to the IMF. 

"In the short term, the main risk relates to the possibility of excessive fiscal tightening in the United States, given recent political gridlock," the report states.

If lawmakers do not raise the federal government's $16.394 trillion debt ceiling, the IMF warns that further financial blunders will ensue and consumer and small business confidence will take a nosedive.

Some hurdles in proposed legislation included the end of the Bush-era tax cuts, middle class protection from the Alternative Minimum Tax, and over 50 “temporary” tax breaks for some individuals and businesses.

Many experts believe the massive spending cuts and tax increases will only further debilitate any hope for the potential of achieving sustained economic growth, or any growth at all for that matter.

The fact that this is an election year has even more conservative experts concerned with the financial crisis...

To understand more about the fear behind the looming “fiscal-cliff storm” watch this CNN Money video, explaining why lawmakers in Washington D.C. really need to get it together before January 1 in order to avert an even deeper recession.