Jan. 1, 2013, seemed a long way off in the Chicken Summer of 2011. That’s when Congress reached a deal that ended, or rather postponed, the debt-ceiling crisis by declaring that automatic cuts in federal spending would be triggered at the beginning of 2013, unless a bipartisan supercommittee came up with a sweeping plan for reducing the deficit. (Predictably, it didn’t.)

Even last August some House Democrats worried that their party had given away too much. Emanuel Cleaver of Kansas City, Mo., called the debt deal a “sugar-coated Satan sandwich.” Steve Cohen of Tennessee was even more imaginative. “I fear it’s a Trojan horse,” he said in floor debate on Aug. 1. “And if you look inside that Trojan horse, it’s Scylla and Charybdis inside, the whirlpools and the shoals.”

Now the Trojan horse with the roiling belly is staring us in the eye. With the attention of the political class fixated on the presidential campaign, Washington is in danger of getting caught in a suffocating fiscal bind. If Congress does nothing between now and January to change the course of policy, a combination of mandatory spending reductions and expiring tax cuts will kick in—depriving the economy of oxygen and imperiling a recovery likely to remain fragile through the end of 2012. Congress could inadvertently send the U.S. economy hurtling over what Federal Reserve Chairman Ben Bernanke recently called a “massive fiscal cliff of large spending cuts and tax increases.”

MAX BAUCUS DRUNK ON THE SENATE FLOOR! FOR REAL ~ YADA YADA YADA!

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The opposite risk is that Congress goes weak in the knees and postpones all the tough decisions for another day. That would saddle future generations with unsupportable debt while feeding the perception that the U.S. will never get its deficits under control. It could finally alarm the vigilantes of the bond market, driving up interest rates on America’s nearly $11 trillion of publicly held debt.

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Which is worse? One is reminded of the Woody Allen joke: “One path leads to despair and utter hopelessness. The other to total extinction. Let us pray we have the wisdom to choose correctly.”

In recent months, some American policymakers have congratulated themselves for ignoring the example of their European counterparts and resisting austerity measures after the Great Recession; as a result, the U.S. economy is expanding, while much of Europe has stagnated. Now, unless the White House and Congress get serious about hammering out a credible, long-term plan for deficit reduction—one that phases in spending cuts and tax increases over a decade—Americans will wake up next New Year’s Day facing either a prolonged deficit binge or excessive austerity that could push us back into recession. And we’ll have no one but ourselves to blame.

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The Bush tax cuts, conceived during his 2000 campaign when the U.S. was running budget surpluses, are a big factor in America’s long-term gap between revenue and expenses. Even bigger is the mounting cost of entitlements: Medicare, Medicaid, Social Security, veterans’ benefits, pensions, and so on. Stimulus measures to drag the U.S. out of its current slump are a comparative flyspeck because they’re temporary. The right formula is stimulus now, austerity later; accelerator now, brake pedal later.

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Hitting the brakes too soon would be unwise. The automatic spending cuts, known as a “sequester” under the Budget Control Act, are only part of the austerity that’s slated to take effect on Jan. 1. That same day, the 2001 and 2003 Bush tax cuts will be over if current law stays on the books. The Obama payroll tax cut and emergency unemployment benefits are also slated to expire. Barclays Capital (BCS) calculates that if all those changes occurred as scheduled, they would subtract 2.8 percentage points from the economy’s annual growth rate in the first quarter of 2013, leaving growth at just 0.2 percent—a hair’s breadth from recession.

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Congress probably won’t let that happen. It’s likely to shrink the automatic spending cuts, which are supposed to add up to a little over $100 billion, split evenly between defense and the rest of the budget. Congress is also likely to extend at least part of the Bush tax cuts again.

“That’s the path of least resistance. And you can almost always count on Congress to go that route,” says Michael Linden, director of tax and budget policy at the Center for American Progress, a Democratic think tank. Barclays senior economist Michael Gapen expects the more modest spending cuts would trim about 1 percentage point off GDP growth in the first quarter of 2013.