Crowded "Lame Duck" agenda: Congress and the White House have entered into discussions to address the so-called “fiscal cliff” that is believed to threaten the budding economic recovery.

The fiscal cliff is the combination of $109 billion in automatic federal spending reductions under sequestration, along with the expiration of the Bush tax cuts.

The cutbacks and the tax cut expiration are scheduled to go into effect within a short time of each other.

While President Barack Obama and House GOP Speaker John Boehner, R-OH, have made a number of conciliatory statements, they also have drawn lines in the sand.

Boehner has said Republicans will not support an increase in income tax rates, while they may be open to changes in deductions and credits. Obama has said he wants the Bush tax cuts to expire for the wealthiest taxpayers.

As of press time, there still was great uncertainty about whether a deal was imminent. Some specialists have predicted that either a temporary fix--or even allowing the tax cuts to expire and the sequester to be initiated--would not necessarily be bad outcomes for the economy, as long as they were temporary. A short-lived action also might loosen the political gridlock of the status quo.

The newly-elected Congress presumably would begin in January to perform strategic cutbacks and broader tax reforms.

However, other specialists have said that financial markets would view continued delays and temporary measures in a negative light, because of failures to compromise in the past.

This week, there was talk of Senate Democrats possibly forcing a vote on a compromise package, but that was highly speculative.

Meanwhile, the lame duck Congress also is faced with a crowded agenda of other legislation, including tax and Medicare fixes and Defense Department authorization.

Approval of the defense authorization bill may be dependent on whether a sequestration deal is approved, suggested Rob Zucker, principal with Winning Strategies consulting firm.

“It is hard to see how the defense bill can be fully resolved, without resolving sequestration,” Zucker told Set-Aside Alert.

Nonetheless, defense contractors are mildly optimistic that the lame duck Congress will pass the defense bill, according to Politico. However, it’s too soon to know which, if any, of the bill’s small business provisions will be approved.