Congress comes back for what promises to be a quick mop-up session before the election. The main items of business include two expiring authorizations, one for farm programs and the other for the federal budget. The former is up in the air; on the latter, the House and Senate are closing in on a deal that would extend the budgetary authority through a continuing resolution for six months. That would push the deadline out to March 31, giving the new Congress and possibly the new President space to make their own mark on the budget. The continuing resolution would meet the annualized $1.047 trillion for discretionary spending agreed to in the spending cap attached to last year’s debt limit deal. This actually increases the budget nominally year-over-year, but overseas contingency operations would drop, in what could be fairly described as a “peace dividend.”

The clearest savings is in the area of overseas contingency funds including military operations in Afghanistan.

For the six month life of the bill, these war accounts are expected to be capped at a rate of spending equivalent to President Barack Obama’s 2013 reduced request of $96.7 billion. This is a 24 percent or almost $30 billion drop from fiscal 2012. And much as Republicans have criticized Obama’s handling of the Afghanistan conflict, this peace dividend allows them to show their conservatives that that total spending is still falling—even with the extra $8 billion allowed.

There are some ominous winds blowing in the form of Maine’s Senate delegation opposing a stopgap, but with the alternative being a government shutdown, it’s likely that an agreement with get honored with passage in both houses.

With the deadlines met (although the farm bill remains an open question) before the election, thoughts turn to the deadlines after it; specifically, the fiscal cliff, and the tax hikes and spending cuts set to go into effect at the end of the year. The assumption is that, regardless of who wins the Presidential election, this would lead to what amounts to a punt into the next Congress, much like on the budget.

Asked about the chances for a fiscal deal in the lame-duck session of Congress, Senate Majority Whip Dick Durbin (D-Ill.) said: “If there’s change at the White House level, nothing meaningful is likely to occur.”

Senate Minority Leader Mitch McConnell (R-Ky.) added: “If it’s a change election, will [Democrats] be willing to do anything before the president is sworn in? I hope so, but I doubt it.” [...]

“If Romney wins the election, everyone is going to kick the can down the road to after Dec. 31,” said New York Sen. Chuck Schumer, the No. 3 Democrat. “But if Obama wins the election, as I expect he will, and he wins by a significant amount, and we keep the Senate with about the same number and we gain a few seats in the House even if we don’t gain the majority, I think it helps the mainstream Republicans come and make a deal.”

Added McConnell: “If you have a status quo election, there’s not much change: The House is still Republican; the Senate is either close Republican or robust minority Republican. My assumption is we get started talking about it.”

A punt would rob Democrats of some leverage, particularly on the Bush tax cuts. If they allowed them all to expire, they would be able to come back and offer a tax cut package and still get a net increase in revenue from the status quo of extending them forever. If they settle on this strategy, it would be hard to see any movement on the sequester, the other major fiscal issue looming. So you could see Congress strategically jump off the cliff, to provide pressure and leverage toward a solution. It’s reasonable to worry that the solution would result in some form of grand bargain, with the threat of recession if nothing is done about the unfolding cliff dive.

So unlike those expecting a punt, I could see a leap, followed by action early in the next session.