3. WHAT DO HUCKABEE AND CHRISTIE DO? Bloomberg News is one of the only journalistic outfits still hiring, so expect a continuous stream of news stories about how Michael Bloomberg may run as an independent for president in 2012. But even if he does, a rich New York mayor isn't what the country is seeking, and thus he would fall flat. For other reasons, ditto for potential candidates Mitch Daniels or Jeb Bush. In a Palin-saturated media environment, it's going to be hard for any unknown (Daniels, Barbour, et al.) to emerge, and it's still too soon for another Bush.
Instead, the potential candidates to watch are Republicans Mike Huckabee — who will continue to fly under the radar — and New Jersey Governor Chris Christie — who, next to Palin, is the name on everyone's lips. For some reason, Huckabee continues to be underestimated, but if history holds, a former governor and fairly successful candidate who knows how to use television has a leg up on all other challengers. To the extent there is a GOP front-runner, he's it — should he choose to run.
On the other hand, everyman Christie has become a folk hero via YouTube in only a year, as he has embodied better than anyone the national zeitgeist with a commonsense, call-'em-as-you-see-'em approach to budget cutting. He's on record as not planning to be a presidential candidate in 2012, so he'd need a change of mind (which could quickly undo his image) or a draft to be viable. But these are strange times, and if there's ever going to be a Wendell Willkie for the primary era, Christie could be the man.
2. DOES THE DEBT CEILING GET RAISED? In the first half of the year, the debt ceiling must be raised or else the government will shut down, in an echo of what happened in 1995. Already, some GOP leaders — buoyed by the new members in their midst — have vowed not to approve an increase without sharp cuts in federal spending that President Obama and Democrats will likely oppose.
Sure, the Obama administration could resort to temporary budget gimmicks to compensate, and the government could even close up shop for awhile. The real problem is that the crisis could spark a meltdown in bond and stock markets, triggering Phase 2 of the financial crisis that began in the fall of 2008. In the last such stand-off in 1995, the stakes were much smaller: will either side blink this time? Our guess here is that Speaker of the House John Boehner will convince enough Republicans to join the Democrats and narrowly get the ceiling raised at the last minute. But it's going to be a close call.
1. HOW DO OBAMA AND CONGRESS DEAL WITH THE STATE AND MUNICIPAL DEFAULT CRISIS? Another cliché: this is the ticking time bomb of our politics and economy. In the coming year, hundreds of cities and maybe even some states are likely to face what amounts to bankruptcy — an American version of what is currently happening in Europe. If they're not bailed out, as many essentially were with the 2009 stimulus, the effects on the economy could be profound, as bond markets tank and thousands on public payrolls are thrown out of work. The GOP Congress is going to be ill-inclined to bail out anyone on a public payroll and states aren't allowed to officially declare bankruptcy, nor are cities in half of those states.