What Happens If Congress Refuses to Pass a Fiscal Cliff Deal?

I've recently heard a few people talk about how congress wouldn't fool around with a fiscal cliff vote because it learned its lesson after it failed to pass TARP, which caused the market to fall apart.  While it may be true that congress is still scared from 2008, it's not entirely true that securities markets fell apart after the first TARP vote failed.  In actuality neither the Lehman bankruptcy nor the failed TARP vote precipitated the bulk of 2008's equity market collapse.  Counter to the historical narrative, the real crash came after TARP was passed.

Lehman announced its bankruptcy on Sunday September 14th and the market was actually up slightly the following week on rumors of TARP.  When congress initially refused to pass TARP, the Dow did fall by 777 points on the day, but recovered more than half of those losses the next day.  In fact, the S&P 500 was down less than 10% from the beginning of September until TARP was passed.  

The market crash began in earnest the day that congress passed TARP.  Between that day, October 3rd, and the 2008 low on November 21, the S&P fell 36%.  After a 20% rally into December, it would continue falling until March of 2009.