Indeed, the automatic spending cuts set for January were created as a last-ditch effort to force Congress to deal with the deficit problem.
Even if lawmakers agreed to whistle past the problem this time, another showdown would loom early in the year.
The government is again approaching its borrowing limit, and needs a vote of Congress to raise it. House Speaker John Boehner says Republicans won't go along with that unless the increase is matched by spending cuts. Failing to raise the debt ceiling could lead to a first-ever U.S. default that would roil the stock and bond markets.
So Democrats and Republicans really need to make a deal.
DO THEY AGREE ON ANYTHING?
Neither side wants middle class tax rates to go up. And neither wants the chaotic, across-the-board budget cuts that come with the “fiscal cliff.”
They also agree something must be done eventually to whittle the nation's debt, and that will mean budget restraints in addition to slowing the growth of entitlement programs such as Medicare.
SO WHAT'S THE HOLDUP?
They're at loggerheads over some big questions.
Obama says any deal must include higher taxes for the wealthiest Americans. Most House Republicans oppose raising anyone's tax rates. Some Republicans say they're willing to consider limiting some tax deductions or credits, however.
Republicans insist on deeper budget-cutting than Democrats. And they want to bring the nation's long-term debt under control by significantly curtailing the growth of Medicare, Medicaid and Social Security — changes that many Democrats oppose.
Meanwhile, Obama wants $200 billion in new economic “stimulus” spending to help speed up a sluggish recovery. Republicans say the nation can't afford it.
IT'S NOT JUST WASHINGTON
Seems like they could just make nice, split their differences and go home for the holidays, right?
But there's a reason neither side wants to give ground. They represent a divided and inconsistent America. True, Obama just won re-election. But voters also chose a Republican majority in the House.
In a nation of red states and blue states, Republican and Democrats alike believe they are doing what their voters back home want.
Neither side has a clear advantage in public opinion. In an AP-GfK poll, 43 percent said they trust the Democrats more to manage the federal budget deficit and 40 percent preferred the Republicans. There's a similar split on taxes.
About half of Americans support higher taxes for the wealthy, the poll says, and about 10 percent want tax increases all around. Still, almost half say cutting government services, not raising taxes, should be the main focus of lawmakers as they try to balance the budget.
When asked about specific budget cuts being discussed in Washington, few Americans express support for them.
Raising taxes and cutting government services is never easy.
THE BRIGHT SIDE
There is a silver lining. Honest. The “fiscal cliff” furor makes this the best chance in a long time to really tackle the $16 trillion national debt.
Obama and Congress have tried and failed over and again to seriously attack budget deficits hitting about $1 trillion per year. This time, the stakes are so high that Washington may finally make some painful choices to head off a long-term crisis.
If the dealmakers can ease in those changes without jeopardizing the shaky economic recovery, Bernanke says the nation's prospects will look brighter in the new year.