Now that the political lines for the next couple of years are clear, the so-called fiscal cliff stands first on the agenda for President Obama and the existing Congress. The matter is urgent. Unless something is done between now and year-end, some $660 billion in automatic spending cuts and tax hikes will almost certainly toss the economy into recession.

Avoiding it probably would have been easier with a Romney victory. By giving Congress an excuse to wait for the new administration to work out its budget, Romney would have offered both sides of the aisle a way to sidestep this difficult issue. But with Obama's reelection, the effort to avoid the cliff now requires hard negotiations. The next few weeks doubtless will see a lot of give-and-take and even with the initial spirit of compromise, recriminations, too. Because neither side can concede until the last minute, it's likely that little will become clear until late December.  But it's nonetheless likely that in the end, Washington will steer clear of the cliff, or most of it, offering a kind of last-minute holiday gift to the economy and markets.

During the coming period of negotiation and uncertainty, investors and business people need to keep in mind that no one in Washington wants to go off this cliff. Even before the election, Congress had voted to fund the government through March, indicating a clear willingness to at least kick the can down the road. What is more, a bipartisan group of eight senators, calling itself the "Gang of Eight," was formed well before the election to devise at least a minimum down payment on the deficit that would forestall all the sequestration of discretionary spending, mostly on defense, something on which the 2011 debt ceiling compromise otherwise would have insisted. House Speaker John Boehner had already outlined the basis of a compromise on the Bush tax cuts. So this process began weeks ago. Still, some pieces of the cliff will be easier to level than others.