The political outlook for 2013
It seems quite clear to me (and Intrade.com backs it up with a 60.8% probability), that Obama will win in November. But, he is unlikely to get a friendly Congress to grease the skids for a smooth second term, at least in terms of pursuing a progressive liberal agenda.
Whether the Democrats retain a veto-proof majority in the Senate is quite unclear, but the odds are not strongly in their favor (in my view.) Even if they do retain a 60% majority, they are still likely to have enough moderates that only sensible, moderate, reasonably bipartisan legislation will make it through the Senate. And the House is even less likely to become "liberal-friendly" in 2013.
The "new" president will have to be a consensus-seeking, compromise-making, patient, bipartisan-friendly, community-organizing (congressional members being the community) leader. Sure, Obama can do it, if he puts his mind to it. I'm positive me can handle it, but his agenda will have to be either very limited or very moderate and bipartisan, or some hybrid thereof.
First up will be the "twin peaks" of expiration of of the Bush tax cuts and the impending budget sequester. (Expiration of the payroll tax cuts is somewhere in there as well, but I can't recall the exact timing.) In my view, both will occur despite reservations on both sides of the aisle and in the White House. Simply standing back and letting these two events occur is the easiest and safest (and best) decision for all parties. I am sure that there will be a number of efforts to roll back at least parts of both, but such efforts will be halfhearted at best. Everybody will be blaming everybody else, but nobody will be willing to do anything different.
Republicans don't want taxes to rise, but they are not willing to give the Democrats the satisfaction and "victory" of raising taxes only on "the rich." Democrats want to raise taxes (a lot), but don't want to take the heat for doing so. And there is zero chance that the Democrats will be willing to stomach big domestic spending cuts, but once again they don't want to take the heat for "busting the budget."
The sequester will be painful to both sides, not to mention that it could force a recession in 2013, but neither side is firmly behind anything resembling a solid bipartisan consensus for an alternative that does in fact seriously address the serious budget deficit, so the painful sequester is the least painful of readily available alternatives that have a ghost of a chance of being agreed upon, or at least mutually agreed to stand aside and do nothing.