The GOP will not allow a tax hike, Obama and the Dems won't cut spending without more tax revenue. Who's going to cave, somebody's gotta give. Could the GOP sell the elimination of some tax expenditures to their base? Maybe, but I'm not seeing a hike in tax rates, even on the uber rich guys like Obama wants. They could sell the changes in the tax code as the price they had to pay, but they held the line on raising the tax rates. Butthey can't sell a tax rate increase, many would be shot down in the next primaries. Not going to happen IMHO, for these guys it's not just about politics but also about what's bad for the economy. Conservatives firmly believe you do not raise any taxes in a fragile economy like this one. So it's also an ideological choice, they really think raising taxes would be the wrong thing to do. Obama and the Dems on the other hand did agree to extend the Bush tax cuts for the rich once already, plus they cut the payroll taxes and other tax cuts this past december, to the tune of $250 Billion, in the name of stimulating growth and jobs. So for them it's a political problem too, but other than the fairness issue it's not like they believe that raising taxes would be a good thing to do for the economy. So who caves? I think Obama will be the one, so he can repeatedly bash the GOP for being for the rich against the little guy. Plus he can say he worked with the GOP in good faith even though they are a bunch of greedy bastards. Would he allow the country to default, does he want to forever be the president who was in charge when that happened? Sure, he can point fingers at the repubs, but they can counter that he and the Dems never once offered any alternative budgets or meaningful ways to cut spending. One way or another, the next several months leading up to and including the next election are pivotal to the direction this country moves in, big gov't vs small, tax and spend vs reliance on free enterprise. What will the social contract evolve into, and who and how will we pay for it?