The United States is edging dangerously close to the "fiscal cliff" as lawmakers and the White House show no signs of coming close to a deal.
At issue is whether House Republicans can hammer out an agreement with President Barack Obama on tax increases for higher earners and whether the president can deliver the spending cuts Republicans want.
The two sides have four days to hammer out a deal to avoid the sweeping tax hikes and spending cuts that are due to kick at year's end. Failure to do so will throw the United States back into recession, economists said.
Indeed, failure to reach a deal could mean the loss of nearly 300,000 federal jobs, according to a George Mason University study. Economists predict the loss of scores of private sector jobs should Congress and the White House fail to act.
Those who keep their jobs would still feel the sting. It was reported that a family earning 50,000 dollars to 75,000 dollars a year could see tax hikes of 2,400 dollars next year, and the Tax Policy Center found that nearly 90 percent of households would be impacted if a deal is not reached.
Scott Nystrom, associate economist at Regional Economic Models Inc., said going over the "fiscal cliff" would halt the economic recovery and trigger another recession, echoing similar statements from the non-partisan Congressional Budget Office.
"It would really set us back. It wouldn't look as bad as things were in '09 or '08, but it would be a setback, it would be an end to the recovery," he said, adding that the economy would shrink by about half a percentage point, a sharp drop from the already lukewarm 2 percent growth economists predict for next year.
Whether or not the president hammers out a deal with lawmakers, fear of the "fiscal cliff" has already damaged the world's largest economy, as it continues to struggle toward recovery from the recession that ended in 2009.
The economy has been sliding over the last few months, not only because of the uncertainty that is typical in any election year, but also because of uneasiness over the "fiscal cliff," Nystrom said.
Some companies have put contracts on hold due to uncertainty, he said, and households are unsure what taxes they might have to pay next year, causing them to tighten their belts in an economy driven by consumer spending.
Obama held talks Friday afternoon with House Speaker John Boehner, a Republican, and House Minority Leader Nancy Pelosi, a Democrat, along with Senate Majority Leader Harry Reid, a Democrat, and Senate Minority Leader Mitch McConnell, a Republican, in a last-ditch effort to clinch a deal to avoid the "fiscal cliff."
The talks marked the first face-to-face meeting the president has had with any GOP leader in nearly two weeks. U.S. Congress is expected to continue to work on a deal over the weekend as the clock winds down to the end-of-year deadline.
Appearing Friday morning on NBC's "Today Show," Senate leaders expressed optimism, with Charles Schumer saying he was "hopeful there will be a deal that avoids the worst parts of the fiscal cliff, namely taxes going up on middle-class people."
He was referring to the roughly 2,000 dollars in additional taxes an average middle class family would have to pay if a deal falls though. "The odds are better than people think that there could be," he said.
GOP Senator John Thune on the same show expressed confidence that the two sides would reach an agreement. "I think in the end we'll get a deal," he said.
But Republican Senator Bob Corker, on Friday's "CBS This Morning," said Friday's meeting was "optics to make it look like we're doing something."
"I'm very surprised that the President has not laid out a very specific plan to deal with this," he said. "Candidly, Congress could have done the same. And I think the American people should be disgusted."
