A post-election stalemate over taxes and spending could lead Washington lawmakers to bring the country to the brink of recession, Merrill Lynch Wealth Management warns.

The double whammy of increased taxes for those with incomes above $250,000 and cuts in mandated federal spending (also known as sequestration) may be too potent for the Federal Reserve to manage with monetary policy, according to Merrill's "After the Election" report published after President Obama won a second term in office.

"If no compromise is reached by the end of this year, the bipartisan Committee for a Responsible Federal Budget predicts that the nation could face a second recession from the combined spending cuts and tax increases," the report said. "Federal Reserve Chairman Ben Bernanke warned Congress in September that the tools at the central bank's disposal may not be 'strong enough to offset' the effects of such a combination."

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