Deal or no deal? That is the question that still hasn't been answered.
But remember, no deal is better than a bad deal. Obama is still holding firm thus far in the face of the Repugnicans who want to slash our social safety net to give millionaires and billionaires more undeserved and unnecessary tax breaks. And Boehner seems to be sweating bullets. If no deal is reached, it will not lead to financial Armageddon like the right-wing plutocrats claim. The so-called "fiscal cliff" is really not a cliff at all--it's more like a staircase. The full effect of the tax hikes (which occur on next year's income) and automatic spending cuts (which are phased in over a period of a few months) will not be felt right away, which clearly gives Obama the upper hand especially after January 1, 2013. No wonder Boehner and his ilk are so nervous.
Even more importantly, the budget deficit is actually NOT the biggest economic problem our nation is facing. The more pressing issue, of course, is the jobs deficit--the whopping 9 million Americans that are still out of work at the end of 2012, five years after the recession officially began (December 2007) and over three years after the recession officially ended (June 2009). We are clearly stuck in a vicious cycle of persistently high unemployment and inadequate consumer and aggregate demand (remember that one person's spending is another person's income and vice-versa). Remember that 70% of our entire GDP is consumer spending, and 20% is government spending. And cutting the budget deficit too much too soon (at least by traditional means) would only make the jobs deficit worse, and the relative lack of revenue from the still-struggling economy is one of the biggest drivers of the budget deficit. Basically, any significant tax hikes on the bottom 90% of Americans and/or any significant cuts in non-defense spending would only hurt our economy and make our future deficits (and national debt) that much worse in the long run. If it turns out that these hikes and cuts must be done, and that is a very big "if", then they must be postponed until our economy is back to normal (i.e. two consecutive quarters of 3% GDP growth or higher and less than 6% unemployment). Congress, you have been warned, so don't drink the Repugnican Austerity Kool-Aid.