There may not be a "deal." Smart people have speculated that we may not need a "deal" and, in any case, a "deal" is not necessarily the be-all and end-all of "governing." I have said more than once that it is not the president's job to tame John Boehner's crazy-ass caucus for him. The president was re-elected on a slate of policies that the country wanted. He has no affirmative obligation to water these down just to "get a deal done" for the sake of appearances, just as he is under no affirmative action to offer up Medicare and Social Security as blood sacrifices just so that John Boehner and his crazy caucus will be placated. The country must be governed, It does not necessarily have to be governed efficiently, as long as the manifest will of the people is somehow expressed through it. Perhaps the people would like it to run more smoothly, but they want most for it to run in such a way that it responds to their expressed wishes. For example, there is not clamoring in the country — or any real need — for the kind of austerity agenda to which all the fiscal cliffies seem to be trying to accustom us. If inefficiency is all that saves us from a damaging set of policies, then god bless inefficiency. -Charles Pierce on the Fiscal Cliff
I don't think we should downplay the possible negative effects going over the "Fiscal Cliff" may have on the economy, but I do agree that, politically, Republicans have a lot to lose and Democrats have a lot to gain by sticking to their positions.
So far the White House has shown no signs of backing down from their position, and they have no reason to. They hold all the cards.