Barack is Back...After winning Presidential election its fiscal cliff worries

Obama wins US Presidential election for the second term as 44th President after winning a key victory in Ohio. The Second coming of President Barack Obama has brought more worries than joy. To begin with the fiscal cliff is top of the mind worry for the world and not just the United States of America. In his victory speech, Obama stressed that the Best Is Yet to Come add that the country lives up to its legacy as the global leader in technology and discovery and innovation, with all the good jobs and new businesses that follow. "We want our children to live in an America that isn't burdened by debt, that isn't weakened by inequality, that isn't threatened by the destructive power of a warming planet. We want to pass on a country that's safe and respected and admired around the world, a nation that is defended by the strongest military on earth and the best troops this - this world has ever known." Yet, Obama will need to quickly secure agreement on avoiding the 'fiscal cliff' and raising the debt ceiling following Tuesday's elections, Fitch Ratings says. The economic policy challenge facing the President is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the US. Resolution of these fiscal policy choices would likely result in the US retaining its 'AAA' status from Fitch. As reflected in the Negative Outlook on the rating, failure to avoid the fiscal cliff and raise the debt ceiling in a timely manner as well as securing agreement on credible deficit reduction would likely result in a rating downgrade in 2013. The fiscal cliff - some US$600bn of tax increases and spending cuts that come into effect on 1 January 2013 - and an increase in the debt ceiling are pressing issues that the President and Congress must address in the coming weeks if the US is to avoid a fiscal and economic crisis. Fitch estimates that the fiscal cliff would tip the US economy into an unnecessary and avoidable recession and result in an increase in the unemployment rate to above 10% in 2013. In Fitch's opinion, the tax increases and spending cuts implied by the fiscal cliff would not fully address the longer-term drivers of higher public spending and the relatively narrow and volatile tax base. Moreover, the fiscal cliff would likely be at least partially reversed by Congress as the economy slowed and unemployment began to rise, perpetuating the uncertainty over government tax and spending policies that has weighed on the economic recovery. Fitch is currently projecting substantial deficit reduction equivalent to around 1.5% of GDP in 2013 as part of a medium-term deficit reduction strategy. Assuming that the fiscal cliff is avoided and there is a timely increase in the debt ceiling, Fitch expects to resolve the Negative Outlook on the US 'AAA' sovereign rating in late 2013. Failure to reach agreement on the fiscal cliff and debt ceiling would likely trigger a rating downgrade before then.