Before embarking on this list of the major issues to expect next year, in the interest of assessing my punditry let’s take a look at my list from last year looking ahead to 2011. I didn’t know what “Occupy Wall Street” or the Arab spring was at that time, nor did I predict the Wisconsin labor uprising. At the time I mistakenly expected the state AG investigation into foreclosure fraud to be legitimate, and number 8 on the list, “Wikileaks Takes on BofA,” was a huge whiff. The filibuster fight kind of went nowhere either.

What I’m trying to say is that I’m not very good at this. I did manage to nail the Euro crisis, the Congressional budget and debt limit fights, the train wreck of a Republican Presidential primary and gay rights advances like the repeal of DADT and New York getting marriage equality as major stories. But the ratio of hits to misses wasn’t the greatest. Still, I will trudge on with this year’s top 10 list:

1) The 2012 elections. Obviously, this story will drive the news the entire year. The President has bounced back from a difficult position to remain competitive with the clownish Republican field. But it does appear that Republicans will nominate their best chance to capture the White House in Mitt Romney, as the other nominees have had their respective boom-and-bust cycles. Romney may have a problem generating enthusiasm among the Republican base, but he will also not inspire as much enthusiasm among liberals working to stop some conservative menace from reaching the White House. With the economy limping along and the President unable to point to a “morning in America,” expect a nasty campaign of character-based attacks, and significantly less reasons to vote for the respective candidates, rather than a slew of mud around voting against the other guy.

The more interesting scenarios will come out of the Congressional elections. Redistricting and a historic unpopularity for the Tea Party-infused House could conceivably lead to a flip back to the Democrats in 2012, which would take 25 seats. At the same time, with Democrats needing to defend 23 of the 33 Senate seats up for grabs, including many in conservative states, Republicans could capture that chamber. It’s not inconceivable to see a change in power in all three branches in 2012, the House, the Senate and the Presidency, which would be a fairly unprecedented scenario. Meanwhile, progressives have a number of standard-bearers to generate support in those Congressional races, including Alan Grayson (Orlando-area House seat), Tammy Baldwin (WI-Sen), and Elizabeth Warren (MA-Sen), who is facing Scott Brown in what will be the most high-profile race of the year.

2. The economy. The outcome of the 2012 elections in part will be determined by the state of the economy. Forecasters have predicted “green shoots” for the third year running, and this year may actually be closer to reality. But headwinds remain in place for the economy in 2012, and while US fiscal policy may not hurt, it’s also highly unlikely to help with any stimulative programs beyond current law. In fact, the major showdown for the economy will come in February, when a conference committee will decide whether to move forward on a payroll tax cut and unemployment insurance extension through to the end of the year. [cont’d.]

[photo: Maxx-Studio/Shutterstock.com]

Monetary policy could get more aggressive, because many of the inflation hawks from the regional banks now serving on the Federal Open Market Committee will cycle out in 2012, to be replaced by more dovish types. That, added to the two new Fed governors who may come aboard, would give Ben Bernanke a freer hand to boost the economy if he so chose. But the European crisis, potential natural disasters across the globe, the parlous state of the Middle East and oil shipping routes, continued anti-stimulus from budget cutbacks in the states and in part at the federal level, and a host of other factors will combine to constrain growth in 2012. Not to mention the fact that housing continues to be a lead weight on the economy, and businesses still don’t see the demand necessary to increase hiring. The unemployment rate, now at 8.6%, may not budge, and even if it does, the increased labor participation rate that would come from a better job market could lead the number upwards.

3. Tax policy. At the end of 2012, several important expiring measures could reshape fiscal policy for years to come. The most important of these would be the expiration of the Bush tax cuts, which would bring in $3.6 trillion in revenue to the Treasury, as much as most of the deficit “deals” in Washington, and enough to almost entirely wipe out the medium-term primary budget deficit. When they were set to expire the first time, in 2010, the Administration calculated that allowing all the tax cuts to expire in a sick economy would not be advisable. They still only seem to want the high-end tax cuts to expire, however, putting them in the same box as they were in at the end of 2010, where they have to pass something affirmatively through Congress, giving Republicans some leverage. The other option is to let them all expire and come back with the “Obama tax cuts” for the middle class in 2013, provided a re-election victory. It’s very likely this won’t get decided until the elections end, in what will be another monumental lame duck session in November and December.

The parties may use the occasion of the expiring tax cuts to reshape tax policy generally, but such an expansive project seems totally unlikely in the lame duck, and getting the parties to agree on a tax overhaul in an election year seems impossible.

4. The other 2012 triggers. In addition to the Bush tax cuts, the payroll tax holiday would likely expire at the end of 2012 as well; nobody plans on extending that beyond that point in the current discussions. The nation will probably reach the debt limit again by the end of the year. And most crucially, because of the failure of the Super Committee, an automatic “trigger” of $1.2 trillion in across-the-board cuts to discretionary spending, half of which would hit the Defense Department, would begin to take effect by the end of 2012. Republican hawks have already initiated legislation to avoid the defense trigger, but the President so far has claimed that he would veto any such efforts. As we get closer to the trigger date, however, you are likely to see a bipartisan bid to avert defense cuts, even though they would merely take the nation back to a military budget similar to Fiscal Year 2008, and turn us from a country that spends more on the military than every country on Earth combined, to a country that spends slightly less on the military than every country on Earth combined. The defense contractor lobby holds a lot of influence in Washington, and they will be out in force on the trigger. A “grand bargain” could result between the expiring tax rates, the trigger, the debt limit and perhaps a host of other goodies, packed into one big lame-duck sandwich at the end of the year.

5. A game-changing Supreme Court session. This is shaping up to be one of the most important Supreme Court years in decades, led by a decision expected in June on the constitutionality of the Affordable Care Act. An unprecedented three days of hearings are expected on the case, and while SCOTUS reserves the right to wiggle out of the ruling and decide it based on standing rather than the merits, it’s just as likely that they will determine whether the individual mandate is legal, in what promises to be a close decision that will reverberate in the Presidential race and go a long way to determining the future of health policy.

But that’s not the only big case. The Court will rule on Arizona’s immigration law, and whether the states can make legislation on a policy usually reserved for the federal government. The Court has already intervened in a case over Congressional district maps in Texas, which could swing 3-4 seats between the parties and determine who carries the House of Representatives. And if South Carolina sues the Justice Department over their blocking of pre-clearance of a voter ID law, and requests an expedited ruling to potentially enforce that law in 2012, the Court could rule on the Constitutionality of Section 5 of the Voting Rights Act.

6. The Euro crisis. Though several “resolutions” have been put together to solve the crisis in Europe, we enter 2012 with no fundamental resolution. The European Central Bank seems to be using large and cheap lending to European banks to bail them out and keep borrowing costs down in the sovereign nations struggling with increased debt. But that’s only worked in fits and starts. What’s more, the austerity measures they and other European leaders have demanded are sinking these countries – Greece, Portugal, Spain, Italy – into deep recessions, which are reverberating across the Eurozone. There doesn’t seem to be a plan for growth and restoring the balance of current accounts, and because the troubled nations cannot devalue their currencies, they appear stuck. So the prospect exists for not just a recession in Europe, but bank runs, debt defaults and a collapse of the currency union, which would have uncontrollable effects across the globe.

7. The future of Occupy. The protest movement that began in Zuccotti Park is still only a few months old, and occupations continue in over 60 locations in the US. Where things go from here is unclear, but the movement that put inequality and Wall Street greed at the center of the national conversation in 2012 is not likely to go away. In the spring, as the weather improves, I’d expect occupations to restart. There are plans for national conventions and conferences bringing Occupy protesters together. The Occupy Our Homes movement offers hope to highlight the foreclosure crisis and defend people’s properties. The spirit of Zuccotti lives on, and they will continue to have a voice in 2012. I’m particularly interested to see how they interact with the Presidential elections.

8. The future of the Arab uprising. The parallel revolutionary movement in the Middle East and North Africa had incredible successes and witnessed terrible tragedy in 2011. In 2012 many of the same fights are ongoing. Protesters in Yemen and Syria continue to speak out against autocratic governments, with some paying the price in blood. Movements crushed in Bahrain and Iran could conceivably spark again. In Egypt, the military which helped drive Hosni Mubarak from power now faces a populist challenge of its own. The protests promise to remain bloody, though ultimately life-affirming, as they fight to take control of their own futures.

9. Justice Democrats and foreclosure fraud. We keep hearing about a settlement in the state Attorneys General investigation, but that has become such a joke by now that even a settlement will not have much of an impact, if it ever happens. The work of five Democratic AGs – Martha Coakley (MA), Beau Biden (DE), Catherine Cortez Masto (NV), Eric Schneiderman (NY) and Kamala Harris (CA) – will have a much greater impact. Maybe one or two of these AGs will join the national settlement, though I’d consider that unlikely. But all of them have active investigations or lawsuits that will advance in 2012. Coakley sued major banks over foreclosure fraud, essentially the act of stealing homes. Masto has lawsuits against the major document processor who fabricated many of the affidavits and foreclosure notices. Biden sued MERS, the electronic registry database, over deceptive practices. Schneiderman has a major investigation on securitization open, and Harris has subpoenaed documents from Fannie Mae and Freddie Mac. All five of these investigations and lawsuits – as well as other interlocking investigations and supports – will go a long way to determining justice and accountability for banks that broke the biggest market in the world, the US residential housing market.

10. The recall of Scott Walker. As a symbol for the backlash against right-wing governors elected in 2010, Wisconsin stands apart. They rebirthed the protest movement in the US with the occupation of the Capitol in Madison, and in the summer they recalled two state Senators who voted for an anti-union law, putting Democrats within a hair’s breadth of capturing one house of the legislature. Now they turn to Governor Scott Walker, who initiated the union-busting law, with a recall effort that looks virtually assured at this point. If the signature gathering effort is successful, the election would happen in the spring, and a successful recall would be only the third against a sitting US governor in history. Walker has already spend a load of money on TV ads, acting as if the recall will take place. It will be difficult for Democrats and their youth/labor coalition to capture the spirit of Madison from February 2011 and keep it going in the recall, but like many Tea Party governors, Walker is unpopular, and he actually has put the economy backward with his policies. So this should be a major fight.