Are We About to Fall Off the Fiscal Cliff?

The day after Barack Obama was re-elected as President of the United States, the Dow Jones Industrial average on Wall Street dropped over 312 points.

The next day, it dropped another 100 points.

Investors, savers, retirees - all lost money if they owned stocks in their portfolios.

The cause? Many said it was the impending 'fiscal cliff,' in which tax cuts - first signed into law by President George W. Bush - that citizens have enjoyed for several years will expire on December 31 unless politicians in Washington, D.C. can reach some compromise. The theory is that the values of investor portfolios could drop by as much as 20-25 percent. Economists say that could put our fragile economy into a recession in 2013.

The media was rife with opinion. Said the Huffington Post:

OH MY GOD IT'S THE FISCAL CLIFF LET'S ALL LOSE OUR MINDS.

That was basically how the ever-thoughtful, ever-sober U.S. stock market behaved yesterday with the turning of the calendar from election season to Fiscal Cliff Death Watch season. Yes, now that President Obama has been reelected, his immediate task is to figure out what, if anything, to do about the ticking time bomb of automatic spending cuts and tax increases that an obstructionist Congress set to go off at the end of the year. If this bomb goes off, then it could cause another recession, several economists have warned. So now this same Congress desperately wants to do something about this ticking time bomb it set, not really because it cares whether the economy goes into recession or not, but because it will immediately jack up taxes on the wealthy, and that injustice will not stand, sir.

But on Thursday, the Christian Science Monitor reported Senate majority leader Harry Reid and House Speaker John Boehner "hit a note of compromise not often heard in the last Congress."

In quotes gathered by the Monitor, Reid said “I'm not for kicking the can down the road. I think we've done that far too much .... We know what the issue is. We need to solve that issue. Waiting for a month, six weeks, six months, that's not going to solve the problem. We know what needs to be done. And so I think that we should just roll up our sleeves and get it done.”

By Friday, President Obama addressed the nation. "We need to ask the wealthiest Americans to pay a little more in taxes," said the president. Obama suggested immediately extending the existing middle class tax cuts. But Obama also hinted he was willing to explore options. "I'm not wedded to every detail of my principles. I'm willing to compromise."

What do you think? Will we fall off the 'fiscal cliff' at the end of the year? And if we do, is our economy headed for a recession? Or will politicians finally break the political gridlock and compromise with each other?

Tell us in the comments. Then vote in our poll.