Will President Obama and Congress Reach an Agreement to Avert a ‘Fiscal Cliff’?

It depends on what you mean by the "fiscal cliff." It seems that common usage refers to a situation where the yearly deficit would have to drop..."Oh, the horror! Anything but that! We have to avoid it!" That's not the real cliff though: The real cliff will occur when the government can't fund itself with printed money anymore and the "road runs out."

Unless they're prepared to cut a trillion in spending, we will continue driving toward the cliff. They're not prepared to cut a trillion in spending, so we will continue driving toward the cliff...and eventually fly right off it. Once the world loses enough confidence in the dollar for OPEC to start taking other currencies for oil, international demand for the dollar will plummet.

Without exports to maintain demand, we will either see very high gradual inflation or sudden hyperinflation, keeping us from buying the oil we need to grow and transport food...and it will get quite ugly, possibly very quickly. At that point, we'll be faced with three options:
a.) Painfully adapt to our new role as a third world country, cut government spending by 90 %, and rebuild a production-focused economy from the ground up.
b.) Do something extraordinarily stupid like triple the size of the military and try to control the world's oil by force.
c.) Do something extraordinarily stupid like cave to global governance.

The second option isn't exactly sustainable, but it seemed to be Romney's preferred way of dealing with the situation (even though it would eventually cause World War III as the US, Israel, and a few allies fought against China, Russia, Iran, the entire Middle East except Israel, and their allies). I imagine Obama's preferred way of dealing with the situation may be the third option: I think he'd prefer to trade in dollars for a new IMF-created world fiat currency before the dollar implodes (kicking the can down the road until the world fiat currency imploded for the same reason). We could no longer print money beyond that point, so he'd either tax the crap out of everyone and bring the economy to a screeching halt in a vain attempt to balance the budget...or he could just let the government go bankrupt and demand regional or global government to "save us." Neither would be good news, but I think something like that is on the horizon if the dollar fails under Obama.

Spending cuts are necessary not only for fiscal sanity and the survival of the dollar but for the broader economy even discounting dollar issues: Most mainstream economists fail to understand that aggregate demand is not the be-all, end-all. There are several reasons for this, but here's one: Whenever the government spends money in a particular sector, it makes that sector more lucrative and diverts investment capital AWAY from all the sectors fueled by actual consumer demand. By spending money, government creates jobs in the short term, but these jobs carry an opportunity cost, and they produce less wealth that consumers demand than market-driven jobs...on a spectrum from being "slightly less efficient" to "as good as paying people to dig ditches and fill them back up," with an emphasis toward the latter. In short, government spending causes a mismatch between what the demand side wants and what the supply side is producing. Until this stops, along with other short-sighted policies, we will all continue getting poorer in the long term (except for government contractors and bankers).

In other words, we unfortunately NEED a recession - one that is not papered over while the underlying problems fester - in order for the economy to restructure itself around industries that consumers actually demand, in direct proportion to that demand...and using investment capital built on savings rather than the infinite money machine, so interest rates and lending more accurately reflect the underlying economy's capacity for sustainable spending instead of being set too low and contributing to the boom/bust cycle.