While an agreement to avoid the cliff could still prove elusive, many veteran Washington-watchers believe a compromise will be worked out to avoid plunging into the abyss on New Year's Eve.
"America's reputation and its economic stability are threatened dramatically by inaction," says Dan Glickman, a senior fellow at the Bipartisan Policy Center who previously served as President Clinton's secretary of Agriculture. "Except for a few zealots, most people aren't going to want to see that happen."
Some even believe that the looming fiscal cliff will eventually lead to a grand bargain between the White House and Capitol Hill on reforming America's tax code and entitlement programs – setting the tone, perhaps, for other agreements over the next few years on issues from immigration to energy. But let's not get ahead of ourselves. Here are five reasons America won't – or let's say shouldn't – plunge off the fiscal cliff on Jan. 1.
Because of the "R" word.
Many believe the specter of a double-dip recession remains the most important reason that Congress and the president will reach some sort of accommodation by Jan. 1. It's something that neither party wants to see – or be blamed for.
The Congressional Budget Office estimates that with the massive spending cuts and tax increases imposed by the cliff, US gross domestic product would shrink by a half percentage point in 2013. (Some private sector forecasters believe the hit could be even more severe.) That amounts to 2.7 million fewer jobs than the economy would otherwise create by year's end, the CBO says, which would push the unemployment rate, now at 7.9 percent, above 9 percent.