Drama kings and queens all across the media and the halls of Congress, the only folks I trust are Obama and Reid. Here's what will happen: Jan 1 will come with no deal and then between 1/2/13 and the Inauguration, they'll work out a deal to cut taxes on the folks making less than $250,000. The whole thing is set up to do that. Sure there were hints at smaller deal(s) in the interim, but that's not going to happen because Boehner doesn't have the votes. Grover Norquist/Tea Party crazies hijacked that some time ago.
And here's the thing. The average American doesn't care what happens as long as:
1. The stock market doesn't freefall. It probably won't. It would have already because Wall Street tends to price this type of thing into its prices in advance. Today was a big day because futures contracts are transacted prior to year end and the Dow only lost 130 points. Not a bad day.
2. Their taxes stay pretty much where they are. Some higher rates, but decent deductions.. We're talking about small margins here. 3% to 5% and such. Folks will see that, but it won't kill their ability to make a mortgage payment or car payment. They might take a shorter vacation or not buy that new car in 2013. But that doesn't kill the economy. Hell, the drought in the Plains and Hurricane Sandy- huge events that cause massive destruction didn't have a super dramatic impact on the economy. Small margins of taxes here and there won't kill the economy.
Congress will scramble to fund the Military and Medicare/ Medicaid. Huge voting blocks depend on this. It would be political suicide not to build back in some appropriations for these areas.
It's a fiscal bump... I mean we survived the AIG/Bear Sterns/Goldman Sachs/Credit Default Swap/ economic mess of 2008-09. Times got tough, but 4 years later and we're arguing over small margins and government programs that can be fixed and added to in January as easily as they can in December.
Of course, 12/21/12 isn't over yet - the Mayan Apocalypse could still happen.