I don’t think the GOP will vote for any new taxes. I think this will probably end with some relatively minor spending cuts and then congress will vote for a debt limit increase to fund spending only until the end of calendar year 2012. Serious entitlement spending reductions won’t happen until a Republican moves into the White House in 2013, because Obama doesn’t want to touch that subject before the election. Negotiations on long-term deficit reduction will soon be postponed until after the 2012 election.
Congress and the White House are moving towards a series of short-term debt extensions, because Republicans don’t want to raise taxes and Democrats don’t want to touch entitlement spending reductions until after the 2012 election. Nobody wants to annoy their political base before the election, and the White House doesn’t give a hoot about increasing federal debt substantially in the next 18 months. This is exactly what I thought would happen. Link to article on this subject from CNBC:
http://www.cnbc.com/id/43597374