Politics: What is the "Fiscal Cliff?"

There is a lot of talk about the "fiscal cliff" and that we should NOT go off it at the beginning of 2013.

As I listen, I've been trying to figure out what this thing we should avoid really is?

From what I gather:
(1) On the revenue side, Bush era tax rates will revert to previous rates resulting in a $500 billion tax increase next year.
(2) On the spending side, the sequester will cut non-defense discretionary spending, around $54.5 billion
(3) On the spending side, the sequester will cut defense spending, around $54.5 billion.

The fear is that going over the cliff will return the USA into a recession.

This item in the WaPo describes what might happen if nothing is done and also describes the political incentives each interest group has in wanting to go over the fiscal cliff.

In brief:
One group thinks taxes are too low and so they want item #1 to happen and will live with item #2 and item #3.
One group wants all spending to be cut  and like items #2 & 3 and will live with item #1.
One group wants defense spending cut (item #3) and will live with item #1 & 2.

Is it possible that the best compromise is to actually go over the "fiscal cliff" as suggested by libertarian policy analyst Veronique de Rugy?

Within Congress, there are probably people in all three groups who despite their indicating something needs to be done would not mind the fiscal cliff because they will get something they want.

And which group would the White House be most sympathetic too?

Of course, both Speaker Boehner and President Obama have indicated they want to make some kind of deal.

Question: what can all three interest groups accept that is NOT the fiscal cliff scenario?

Of course, there is also the "kick the can" resolution: no changes in the tax rates and cancel the sequester.