Resolution of last year's "fiscal cliff" fight was achieved in the first few hours of the new year with a tax package that made permanent 82 percent of the Bush-era’s tax cuts. This may have made a "grand bargain" on the deficit that balances tax and spending provisions much more difficult to achieve and heightened the likelihood of more spending cuts.

While the outcome of the 2012 election will still ultimately decide next steps on the federal budget, a status-quo election that leaves Democrats in control of the presidency and Republicans in control of the House of Representatives seems likely to produce a budget stalemate that will last through the rest of the year and will trigger a "fiscal cliff" of spending cuts and tax increases in the new year.

On Sept. 20, the two congressional tax-writing committees held a joint hearing on the tax treatment of capital gains – gains on assets such as stocks, real estate, and other forms of wealth. The combined hearing – which brought together members of the Republican-controlled House Ways and Means Committee with members of the Democratically controlled Senate Finance Committee – demonstrated the commitment of both parties to address tax reform issues soon after the elections. Such reforms may come as part of a larger budget package intended to prevent the federal government from going over a "fiscal cliff" on Jan. 2, when a host of Bush era-tax cuts are set to expire and across-the-board spending cuts required by the 2011 Budget Control Act will go into effect.