Sounding alarm bells Thursday were stern words from Senate Majority Leader Harry Reid, D-NV, who cautioned that there is hardly any time left for a deal.
"I have to be very honest. I don't know time-wise how it can happen now," a pessimistic Reid said in a press conference from the Senate floor.
Acknowledging the urgency for some kind of deal by New Year's Eve, U.S. President Barack Obama cut short his Hawaiian Christmas vacation to return to Washington.
According to CNN, a Republican senator said President Obama told Sen. Mitch McConnell, R-KY, that the president would send a proposal to the GOP on Thursday.
Retiring Rep. Steve LaTourette, R-OH, told CNN that lawmakers are putting finger-pointing ahead of deal making.
"Nobody is willing to pull the trigger" on an agreement because "everybody wants to play the blame game," he said. "This blame game is about to put us over the edge."
Country Needs Fiscal Cliff DealUntil a deal is confirmed, Americans brace for the worst.
"The American people are waiting for the ball to drop, but it's not going to be a good drop," Reid added.
What could happen before the New Year is a short-term deal that stalls further negotiations until the new Congress convenes in January.
While Republican House Speaker John Boehner appears willing to budge on the idea of raising taxes for higher-income earners, members of his conservative party maintain they were elected to see that taxes are not raised and are standing firm on the subject.
The inability of lawmakers to reach a compromise that will outline what taxes, regulations and deficits will look like next year has left scores of businesses and individuals reluctant to make major moves regarding investments, spending and hiring.
The budget gridlock increases the risks of further economic slowdown next year, and quite possibly another recession.
Also sending shivers across the country was the intimidating warning Wednesday from the Treasury Department that the government would hit its legal borrowing limit, a staggering $16.4 trillion, by Monday. The government can use accounting "tricks" to buy about two months' time, but U.S. Treasury Secretary Timothy Geithner said fiscal cliff deal talks made it unclear how long those measures would last.
President Obama has been adamant that he will not haggle with Congress again over raising the debt ceiling. The first time was in 2011 when the GOP said they wouldn't raise the limit unless the White House agreed to steep spending cuts.
The president holds it is lawmakers' responsibility to authorize payments for debts the country has already amassed.
U.S. equity markets, which have remained surprisingly resilient in the face of a fall off the cliff, plunged after Sen. Reid's cautionary comments. By 2:30 p.m. the Dow Jones Industrial Average was down more than 140 points to 12,967.83.
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