Consider this article from the NYT via MSNBC.
Regardless of how the November elections turn out, at the first of the year Congress is staring down the twin barrels of a fiscal shotgun they themselves loaded and cocked, and whose trigger time and mathematics will pull in January. First, the already once-extended Bush tax cuts expire. To compound the problem, automatic budget cuts (aka "sequestration") are set to kick in to achieve particular amounts of deficit reduction since back in 2011 the ill-fated "super-committee" failed to come up with an agreement themselves. Per the agreement, half the cuts will come from defense spending, and half from domestic spending. The amounts are not small.
Now Congress is going to have to figure out how to respond to the situation, and juggle three difficult and hopelessly interlinked factors: spending, taxes and the deficits. None of the choices are good, and some of them aren't even politically feasible.
Once choice is of course to do nothing, in which case taxes rise and hundreds of billions of dollars will be cut from the federal budget. This will do wonders for the deficit, at least in the short term, but will be politically and economically disastrous. This option goes nowhere, unless Congress is feeling not only suicidal, but murderous. Or unless it's so dysfunctional that it can't do anything else, which is really another way of saying it feels suicidal.
Another possibility is that Congress could extend the Bush tax cuts and hold the deficit line, which would result in even more draconian spending cuts. This is if anything even less feasible. Sequestration can be avoided only to the extent that Congress agrees to make conscious choices about the spending cuts. But Democrats will be unwilling to add more of the reduction to the domestic side in order to save the Pentagon budget, and Republicans won't be willing to cut the military even more than would happen if the Bush cuts expire. This scenario, too, simply will not happen.
What this means is that in addition to the spending cuts that everybody expects and are more or less resigned to, any credible solution will include either increases in (a) taxes or (b) deficits, or far more likely (c) both. Nobody gains much from this, but it does pose more of a political problem for Congressional Repugs, who have taken supposedly immovable "cold dead hands" stands against both deficits and taxes. This made for good and highly successful political theater, but in the end, you can't really change the laws of arithmetic. There are a few right-wing crazies who are willing to let everything go down the tubes in the service of their declared principles, but most are going to crack in the face of reality. Even many of the ones who owed their electability to fiery Tea Partyish rhetoric will be exposed as being among those who have the courage of the knife but lack the courage of the blood, as the saying goes. Forgive my schadenfreude, but it couldn't happen to a nicer bunch of guys.
The questions are to what extent Congress is willing to cook the books to hide the deficit or to vote to back out of the deficit reduction plan it made with itself, and how much pain they are willing to inflict on the Pentagon. Either way, some tax increases--or for those who can't face the truth, "revenue enhancements"--are coming down the line. So what are your ideas for how taxes should be increased? Shall we go for corporations/businesses, or for coupon-clipping capital-gains babies like Mitt Romney, or for high-income individuals of all kinds, or shall we simply continue to shift more of the burden to the middle class again? Oh yeah, this is going to be fun.