Associated Press

A "fiscal cliff" of steep tax increases and deep spending cuts scheduled to begin next year looms darkly over the presidential race.

While both parties blame the other, almost nobody thinks President Barack Obama and Congress can resolve the impasse before the Nov. 6 election.

Thus, the winner will immediately face an enormous challenge that must be dealt with in a matter of weeks.

Right now, the candidates are competing for attention with the Summer Olympics in London.

But the unemployment report for July, due out Friday, likely will serve a cold dose of economic reality as Congress begins a month-long summer recess.

Economists and analysts don't expect much change from the dismal 8.2 percent rate in both May and June, especially considering last week's report showing economic growth of just 1.9 percent.

Economic weakness weighs on Obama's re-election chances and plays to what polls show is Republican challenger Mitt Romney's biggest strength, handling the economy.

Romney wrapped up a weeklong, gaffe-marred overseas trip Tuesday in Poland and resumes U.S. campaigning on Thursday with appearances in Colorado.

Obama, who raised funds Monday night in New York City, hits the trail again on Wednesday with two days of campaigning in Ohio, Florida and Virginia.

The "fiscal cliff" could bring about a $400 billion tax increase as Bush-era tax cuts all expire together, along with another $100-billion-a-year in spending cuts that would hit the Pentagon especially hard.

The cuts would come from a triggering mechanism put into a bipartisan agreement last year to automatically slash the federal deficit in the absence of a congressional debt-reduction deal.

Neither side wants that to happen, but nobody yet has figured a way out.

"You don't borrow what you cannot pay back," Romney said in Poland.

Sounds simple. It isn't.


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