Obama breaks off vacation to deal with ''fiscal cliff''

With President Barack Obama heading back to Washington, US lawmakers were under increased pressure Wednesday to hammer out an 11th-hour deal that prevents taxes from rising for all Americans. The president cut short his Christmas vacation in Hawaii and was set to fly back to the US capital late Wednesday, five days after calling on Congress to end their bitter deadlock over how to avoid the so-called "fiscal cliff."
But members of the US House and Senate - not to mention the White House - have shown no outward signs of narrowing their differences over how to avoid looming tax hikes for all Americans and deep, mandated spending cuts that kick in from January 1 if Congress does not act.
"I don''t yet know what Senator Reid has planned," Don Stewart, deputy chief of staff to Republican Minority Leader Mitch McConnell, said Wednesday, referring to Senate Majority Leader Harry Reid. "The White House hasn''t reached out to us, nor have Senate Dems. They seem to be working on this on their own," Stewart told AFP. After Democrats and Republicans traded blame last week over the failure to reach a deal before the holidays, House Republicans led by Speaker John Boehner punted to the Democratically-led Senate, asking Obama and Reid to write up legislation that can pass both houses.
Senators and representatives are expected back in Washington on Thursday, giving them less than a week to work out a deal that avoids the fiscal cliff, which economists say could send the US economy tumbling back into recession. With the deadline rapidly approaching, Obama pared back his hopes for a year-end grand bargain that addresses taxes as well as substantial spending cuts as part of a 10-year deficit-cutting bill, saying Congress should at least work out a stop-gap measure to protect middle-class taxpayers.
Obama successfully campaigned for re-election on his support for an extension of the Bush-era tax breaks to 98 percent of Americans - those in households earning up to $250,000 a year. In talks with Boehner on a larger compromise, the president had offered to raise that threshold to $400,000.