And instead of freaking out, markets embraced the good news from the Fed and decided the taper was mild enough not to drive rates higher and choke off growth. Investors also embraced the many caveats from outgoing Fed Chairman Ben Bernanke that the central bank would keep rates at effectively zero well into the future and could resume other stimulus if needed.
It sure seemed like the Fed scored a perfect bull's-eye in beginning the long-awaited and much feared taper.
So some of the political and economic risks we thought we would face in 2014 are now coming off the table early. But there's much more ahead.
So what role will Washington play in the economy and markets next year? Here is a brief look at a few pressing issues.
The debt ceiling: Treasury says it must be raised by late February or early March. The Congressional Budget Office says we could bumble along till June. Either way, Congress must raise the borrowing limit and Republicans will demand something in return.
(Read more: Govt warns debt ceiling could hit by Feb)
The consensus among Beltway insiders and Wall Street executives I talk to is that with the focus shifting to the midterm elections and everyone fearful of fallout from a big fight, a deal will get made that offers Republicans something on spending while not pushing the nation to the brink of default.
It's still not clear what this deal will look like but let's leave the debt ceiling as a medium-level risk as we close out the year. No reason to panic about this yet.
Tax reform: On this front, Washington could boost the economy by lowering the top marginal corporate rate and still generate revenue through loophole closing and raising the rate on carried interest, among other things.
But with Senate Finance Committee Chairman Max Baucus now likely headed to China as the next U.S. ambassador, it looks like these efforts may have to start from scratch.
Baucus and House Ways and Means Chair Dave Camp, R-Mich., put together a number of solid tax reform proposals. But incoming chairs of both committees will likely want to take their own approach. And in an election year, the hope for fundamental tax reform seems pretty low.
Senate Finance will likely go to Sen. Ron Wyden, D-Ore., unless he gets leapfrogged by Sen. Chuck Schumer, D-N.Y., who may be growing tired of waiting to succeed Sen. Harry Reid, D-Nev., as majority leader. Schumer has said publicly the Senate will probably stick to tradition and Finance will go to Wyden, disappointing some on Wall Street who hoped for a favorite son to grab the gavel.
House Ways and Means is likely to go to Rep. Paul Ryan, R-Wis. The former vice presidential nominee has now shown his ability to cut bipartisan deals, which would tend to suggest tax reform remains possible. But it's a big lift to get it done during election season and Ryan would be under heavy pressure not to allow any new revenue to be used for Democratic spending priorities.
(Read more: 'Can't shoot for the moon every time': Paul Ryan)
So put the odds of tax reform in 2014 at less than 25 percent unless some kind of deal can be shoe-horned into the debt ceiling hike, which seems impossible from a timing perspective.