According to senior administration officials, Obama is not eager to go over the cliff, but he is willing. If no deal is reached by the end of the month, all the Bush tax cuts — for the rich and not-rich — will evaporate. Obama would then demand in early January that the new Congress immediately pass legislation to reinstate the lower tax rates for the bottom 98 percent.

According to David Corn of Mother Jones and Greg Sargent of The Washington Post, President Obama won't give in to Republican ransom demands over tax cuts for the wealthy—even if that means going over the so-called fiscal cliff on Jan. 1, 2013. Writes Corn:Republicans can avoid this scenario simply by passing the Senate's extension of middle-class tax cuts—in a matter of minutes, a huge chunk of the "fiscal cliff" would be resolved. Congress would still have to rework the automatic spending cuts contained in the sequester and enact stimulus measures like extended unemployment benefits, something to replace the payroll tax cut, and funding for infrastructure investments, but the question of tax rates would largely be settled.

If they refuse to act, we'll start next year with an ongoing hostage crisis over middle-class tax cuts. And given that these middle-class tax cuts would actually benefit every taxpayer, Republicans would be in the position of opposing a rate reduction that benefits every American taxpayer simply because they believe the wealthiest taxpayers should get an even bigger benefit. Under the best of political circumstances, that would be a tough position for Republicans to depend, but given the results of November's elections, it is a nearly indefensible position. In light of that reality, it's not hard to see why the White House isn't terribly afraid of going over the cliff. The real question is whether Republicans are bluffing or if they are fools. It won't be long before we find out.