Two simple points:
First, by accepting the framing of a "fiscal cliff" we are setting the stage for politicians to do the wrong thing, overall, and for Democrats, in particular, to do something economically and politically stupid.
Democrats should agree on alternative phrasing.
Perhaps the "fiscal hillock?" Hoping others might provide alternatives below.
We should not let the guys who just lost frame this debate.
Hopefully Obama has made it clear to Boehner and McConnell that he's not the least afraid of the "sequester" taking effect - if it happens, it gives him more leverage in negotiating the "fixes" he wants.
In fact, Obama should demand up or down votes on 200 appointees before he even comes to the table on this.
Second, Obama should let the "Bush Tax Cuts" expire.
There's no reason to keep reinforcing crass Republican branding in our efforts to fix the mess they created.
Obama should let those tax cuts expire, and the next day introduce an American Growth Act - which would reinstate (retroactively as necessary) tax cuts for everyone earning below $250K.
Keep it simple. Dare Republicans to oppose the simple bill.
If Dems aim for something more complicated and ambitious vis stimulus, Republicans will play their standard game of pretending to negotiate for as long as possible before lighting their Molotov cocktails and resuming the scorched earth campaign.
If we think we can get more, propose an "American Growth Act II" later.
Last thought: if Republicans keep running around screaming about our debt to China, we should treat it as a teachable moment:
1) The more we owe China, the more they are beholden to us, not vice versa. They get this; its why they are trying to diversify away from US debt
2) The vast bulk of our debt is money we owe to ourselves - the real question is "how much do we want our kids to owe our plutocrats?"
Here's hoping Obama has learned from his first term how to play Boehner and McConnell more effectively in the public arena.