Wednesday, 02 Jan 2013 11:58 AM

By Michael Kling

If you’re breathing a sigh of relief now that Congress reached a compromise to avoid the dreaded fiscal cliff, don’t relax just yet.

Three more “fiscal cliffs” loom in the near future, notes CNNMoney.

For one thing, the government has reached its debt limit. If it is not raised soon, the country will default, prompting a doomsday scenario. Even if Congress increases the limit, if negotiations are anything like the 2011 donnybrook, political infighting may frighten the financial markets, harm business confidence and crimp economic recovery.

The Treasury Department is using its so-called “extraordinary measures” to meet government debt payments, but it will reach the end of those measures in about two months.

Sequester, the second cliff, entails automatic spending cuts, totaling about $110 billion this year, or 8 to 10 percent for most government programs. The cuts were scheduled for Jan. 1, but Congress postponed the date two months.

The cuts “would have a devastating impact on important defense and nondefense programs,” according to the White House budget office.

Congress created the sequester as part of the 2011 debt ceiling deal, hoping to force itself to control spending, yet ended up only postponing hard decisions.

The continuing budget resolution, the third cliff, is a short-term budget agreement that funds the government in lieu of a real annual budget, according to CNNMoney. Congress is supposed to approve spending for the fiscal year starting Oct. 1, but rarely passes it on time, so instead approves short-term continuing resolutions. If it doesn’t, the government would shut down many agencies. The current stopgap measure ends March 27.

Washington’s inability to reach agreements contributes to a poor economic outlook, according to Pimco CEO Mohamed El-Erian. “The new normal is a stagnant economy with an overlay of political polarization and dysfunction,” El-Erian told CNBC. “The new normal is sluggish growth and persistently high unemployment and concerns about debt and deficits.”

Political leaders, he said, may be unable to control the growing national debt without hurting economic growth.

Editor's Note: The Final Turning Predicted for America. See Proof.

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