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What to expect from Washington, or NOT, in 2015

As President Barack Obama heads out for his two-week Christmas break in Hawaii he will be leaving a Washington vastly transformed over the course of 2014 with a very uncertain outlook for the year ahead.

Obama made good on his promise to use his "pen" and his "phone" to make sweeping changes without the assistance of a recalcitrant Congress. Some of what Obama did on immigration reform and normalization of relations with Cuba could face significant pushback from the GOP-controlled Congress next year.

A woman jogs near U.S. Capitol building in Washington.
Yuri Gripas | Reuters

But none of it is likely to be rolled back completely. Obama has fairly wide latitude short of repealing the Cuba embargo (which only Congress can do) to increase trade with the island nation while opening up an embassy.

On immigration, Congress is not likely to make good on threats to defund the Department of Homeland Security unless Obama changes course. And the 5 million or so undocumented immigrants Obama formally shielded from deportation were not likely to get sent home anyway. Some future president and future Congress could supersede the Cuba and immigration moves. But for now, their impact will likely remain. Obama's actions on carbon emissions, however, could face a more uncertain future.

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The big question for 2015 is how Obama will interact with a Congress that will be completely under Republican control and even more hostile to any attempts by the president to act unilaterally through executive action.

The fear among progressives is that Obama, reaching for legacy accomplishments, will side with Republicans on two big issues: corporate tax reform and trade deals.

The Democratic left, which is increasingly dominant in the minority party, is deeply dubious of any tax reform deal that will lower the top rate while not raising revenue by closing "loopholes" enjoyed by specific industries.

The left also does not want to see Obama jam through trade deals like the Trans-Pacific Partnership that they fear would hurt U.S. workers while possibly limiting the jurisdiction and power of American financial regulators.

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Progressives are also very worried that Obama's willingness to sign the year-end spending bill with the roll back of a significant Dodd-Frank provision on derivatives—as well as his nomination of a senior Wall Street banker for a top Treasury job—means he will go soft on the entire financial reform law in 2015.

The concern is that in the quest to get trade and tax reform deals done, Obama will accept Republican efforts to water down other financial reform rules, notably the Volcker rule bans on proprietary trading and hedge fund and private equity investments by federally insured banks.

In a conversation with me in Washington this week, White House National Economic Council Director Jeff Zients tried to reassure nervous progressives, saying the president will not do a trade deal that does not boost the middle class and will hold the line on any further Dodd-Frank changes.

"I don't want to in any way minimize that we did not like that provision. We didn't want that provision in there," Zients said of the derivatives language in the spending bill. And he rejected the idea that it would be the first step in defanging Wall Street reform. "That will not be the case," he said. "The president will not allow for Dodd-Frank to be watered down."

By the middle of next year most of the action will shift from Washington to the 2016 campaign trail. If the trade deal and tax reform are not done before then (and the betting here is they won't be) then they are not likely to get done at all.

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The Hillary Clinton campaign—which remains a near but not total certainty—will not want President Obama angering the Democratic left and making her job tougher by pushing controversial tax and trade deals late into 2015. If that's happening, it could all but force Massachusetts Sen. Elizabeth Warren into the presidential campaign to lead the liberal revolt. Warren continues to emphatically say she is not "running" for president, present tense. That could change.

On the GOP side, there will be a free-for-all for the soul of the party and the GOP nod. Right now, former Florida Gov. Jeb Bush is probably the front-runner. But his efforts to sell conservatives on his immigration reform and education vision could go completely bust. Or he could defy the pundit class (which says he could be the Jon Hunstman of 2016) and succeed in navigating the early primaries and then clean up later in the process, starting in South Carolina.

If he does that, Bush would emerge as a formidable general election candidate. If he doesn't, the GOP could wind up with a fresh but entirely untested face for the general (Rand Paul, Marco Rubio, Scott Walker et al.) who might wind up roasted by Hillary Clinton.

Trying to predict the outcome of the presidential race at this point is a fool's game. So much could change and so much is uncertain. But the safe bet for D.C. in 2015 is to not count on any significant legislation coming off the Hill and for Obama to issue vetoes of any encroachments on his legacy achievements on health care and financial reform. Then we can all pop the popcorn and watch an amazing presidential campaign unfold. Happy holidays and see you in the new year.

—By Ben White. White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money []. Follow him on Twitter .