US President Barack Obama has cut short his holiday in Hawaii and returned to Washington to try to persuade Congress to reach an agreement avoiding the “fiscal cliff.”
The term refers to a series of tax hikes and spending cuts that will be implemented automatically if a deal cannot be reached by Monday.
Hours before Obama’s return the atmosphere around the talks remained confrontational:
“The Republicans in the House have left town. The negotiations between the President and the Speaker have fallen apart as they have for the last three-and-a-half years.
“We’ve tried mightily to get something done,” said Senate Majority Leader Harry Reid of the Democratic Party.
But Senate Minority Leader Mitch McConnell said the Republicans have been doing all they can to reach a deal:
“Last night I told the President we’d be happy to look at whatever he proposes. But the truth is we’re coming up against a hard deadline here and as I said, this is a conversation we should have had months ago.
“The Republicans aren’t about to write a blank cheque for anything the Senate Democrats put forward just because we find ourselves at the edge of the cliff.”
The fiscal cliff could send the still-fragile US hurtling back into recession.
Consumer confidence has fallen to its lowest level since August and stocks have been tumbling on Wall Street.
A no deal will result in around 405 billion euros (536 billion dollars) of tax increases which would affect nearly all Americans.
The military and other federal departments would also have to absorb around 83 billion euros (110 billion dollars) in spending cuts.
If the negotiations pass the January 1 deadline it does not necessarily mean that the tax increases and spending cuts would become permanent however, as the new congress which begins its work next month could cancel them retrospectively.