Adding to the potential for a protracted struggle, it's widely believed that the $1.2 trillion in spending cuts kick in immediately at the start of 2013. However, multiple sources aware of talks said there is plenty of wiggle room and that austerity cuts could be pushed back for months.

As a result -- in theory at least -- negotiations could continue before the economy takes a direct hit.

Durbin insists that Obama is hoping for the best over the tax cuts and sequester, but he says the president won't yield on either:

"The president isn't going to put either gun in the holster until we have this showdown under way," Durbin said.

Immigration reform

Comprehensive immigration reform was a pledge Obama made as a candidate and broke as president. Although he took steps to ease restrictions on the children of undocumented workers late in his first term, he once again vowed to turn his attention toward the issue at the beginning of a second term.

Placing the blame on Republicans for blocking congressional efforts for reform, Obama told Rolling Stone magazine that the GOP would move on immigration because Republicans will "start recognizing that alienating the fastest-growing segments of our society is probably not good politics for them.

"Should I win a second term, a big reason I will win a second term is because the Republican nominee and the Republican Party have so alienated Latinos," Obama told the Des Moines Register.

Durbin, a co-sponsor of the DREAM Act, expressed similar confidence in a future agreement.

"Republican senators have come to me privately saying let's get this done after the election," he said.

The senior senator said he expects Democrats will propose comprehensive immigration reform legislation that would include work visas and relief for agriculture workers.

In a statement emailed to CNN, Kvaal said an Obama immigration plan would "strengthen enforcement of immigration laws at the border and hold unscrupulous employers accountable. Those here illegally would be required to register and get right with the law, pay taxes and fines, learn English and submit to background checks before they can get in line to apply for a legal status. And it would strengthen our legal immigration system by attracting the best and brightest from around the world, give farmers a legal way to hire workers and reunite families rather than splitting them apart."

Every Democrat interviewed by CNN agreed there would be a move toward a comprehensive plan, but some were less optimistic it would be as far-reaching.

"DREAM Act-plus is more likely," one Democrat suggested.

Another senior Democrat expects the president to "go for comprehensive reform and see whether there are any takers."

Working with Congress

The president says if he's re-elected he hopes the Republican Party will change.

"I believe that if we're successful in this election, when we're successful in this election, that the fever may break," the president said in June in reference to the GOP. "My hope, my expectation, is that after the election, now that it turns out that the goal of beating Obama doesn't make much sense because I'm not running again, then we can start getting some cooperation again."

Axelrod, the president's long-time adviser, argued that an Obama win could cause a shift in the opposing party:

"I've always believed there are Republicans who are locked in by the dynamics of their own party and know the American people want them to cooperate where they can. Our goal is to liberate these Republicans of goodwill to see a bright new day and tell the Grover Norquists of the world to take a hike," Axelrod said.

But more Democrats expect the change to come from the other end of Pennsylvania Avenue: from the president himself.

Asked what the president learned from his first term, a senior Democrat said, "He'd rather work with them (Republicans) than against them." But the source wasn't optimistic, quickly adding, "He won't give them two years to jerk him around like he did last time."

That was a sentiment echoed by every Democrat contacted by CNN. One said the president learned from his first term that "being president is a continual campaign and can't separate legislating from the campaign."

Another argued that Obama will have more success if he builds relationships away from Capitol Hill.

"He will have to find major expressions of trying to bring people together that don't just involve trying to cut deals with GOP in Congress. At the end of the day they have his number on that. They can assure he's unsuccessful," the Democrat argued.