Keeping this civil...
It will be interesting to watch congress to see if they can pass a budget. I just hate how a party will automatically reject any idea the other side has. If we do fall off this fiscal cliff, it will be a rude awakening some/most people. I'm in the defense industry by trade, and our company is already planning layoffs with or without sequestration.
The upside to the sequestered cuts is that the switch flips immediately, but many of the impacts aren't felt until later. The market might freak out in the short term due to the uncertainty, but who in congress isn't going to back a tax cut for the middle class in January? Who would refuse to back a bill to strengthen defense after the cuts? Both Dems and Repubs will have no choice at that point.
If the congress doesn't act now on a balanced solution before the end of the year and the President has the sack to wait and trigger the automatic cuts (I have serious doubts on both), he can get whatever he wants come January. Why? Because congress doesn't want the ramifications of those cuts hung around their neck. It would be a rare instance where their own selfish political interests help facilitate getting something done for a change.
That said, the recovery is fragile, actually rocking the boat too much could shake things up in a bad way. But that doesn't preclude congress from coming up with a sensible ten year plan that doesn't endanger what's been slowly taking root the past four years.
My favorite part of this whole thing is that it's a big self inflicted wound because of the debt ceiling debacle last year. The Republicans threw a fit over raising the debt ceiling and demanded spending cuts. Both sides on the committee couldn't come to an agreement and so this sequestration stuff came into play. The ultimate irony is that the Democrats could end up getting more of what they want out of the deal by going off the "fiscal cliff" and setting the terms in January. They could get taxes on upper income earners, middle class tax cuts and huge cuts in defense spending... and they got to raise the debt ceiling in 2011.
But I doubt it will go that extreme. Regardless, it will be a hilarious couple of months to sit back and watch those jerks squabble.
