Republican presidential nominee Mitt Romney answers a question during the second U.S. presidential debate in Hempstead, New York, October 16, 2012.

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1 of 2. U.S. House Speaker John Boehner (R-OH) speaks to the media on a ''fiscal cliff'' on Capitol Hill in Washington, December 20, 2012.

WASHINGTON | Sun Dec 23, 2012 5:33pm EST

WASHINGTON (Reuters) - Some lawmakers voiced concern on Sunday that the country would go over "the fiscal cliff" in nine days, triggering harsh spending cuts and tax hikes, and some Republicans charged that was President Barack Obama's goal.

"It's the first time that I feel it's more likely that we will go over the cliff than not," Senator Joe Lieberman, an independent from Connecticut, said on CNN's "State of the Union."

"If we allow that to happen it will be the most colossal consequential act of congressional irresponsibility in a long time, maybe ever in American history."

"It looks like to me that obviously this is going to drag on into next year, which is going to hurt our economy," Republican Senator Bob Corker of Tennessee said on CBS "Capitol Gains."

The Democratic president and Republican House of Representatives Speaker John Boehner, the two key negotiators, are not talking and are out of town for the Christmas holidays. Congress is in recess, and will have only a few days next week to act before January 1.

On the Sunday TV talk shows, no one signaled a change of position that could form the basis for a short-term fix, despite a suggestion from Obama on Friday that he would favor one.

The focus was shifting instead to the days following January 1 when the lowered tax rates dating back to President George W. Bush's administration will have expired, presenting Congress with a redefined and more welcome task that involves only cutting taxes, not raising them.

"I believe we are," going over the cliff, Republican Senator John Barrasso of Wyoming said on Fox News Sunday. "I think the president is eager to go over the cliff for political purposes. I think he sees a political victory at the bottom of the cliff."

Some Republicans have said Obama would welcome the fiscal cliff's tax increases and defense cuts, as well as the chance to blame Republicans for rejecting deal. Obama has rejected that assertion.

Democrats have charged that Boehner has his own self-interested reasons for avoiding a deal before January 3, when the House elected on November 6, is sworn in and casts votes for a new speaker.

Democratic Senator Charles Schumer of New York said on NBC's "Meet the Press" that Boehner has been reluctant to reach across the political aisle for fear it could cost him the speakership when he runs for re-election. "I know he's worried," said Schumer.

Boehner, who so far has no serious challenger for the job of speaker, has said that he has no such concerns.

Such finger pointing has been under way since Congress returned after the election, but it has gained intensity in the past few days, with the heightened prospect of plunging off the cliff.

Congress started the clock ticking in August of 2011 on the cliff. The threat of about $600 billion of spending cuts and tax increases was intended to shock the Democratic-led White House and Senate and the Republican-led House into bridging their many differences to approve a plan to bring tax relief to most Americans and curb runaway federal spending.

Economists say the harsh tax increases and budget cuts from the fiscal cliff could thrust the world's largest economy back into a recession, unless Congress acts quickly to ease the economic blow.

MARKETS COULD TUMBLE

The most immediate impact could come in financial markets, which have been relatively calm in recent weeks as Republicans and Democrats bickered, but could tumble without prospects for a deal.

Markets will be open for a half-day on Christmas Eve, when Congress will not be in session, and will be closed on Tuesday for Christmas.

Wall Street will resume regular stock trading on Wednesday, but volume is expected to be light throughout the week with scores of market participants away on a holiday break.

If Congress fails to reach any agreement, income tax rates will go up on just about everyone on January 1. Unemployment benefits, which Democrats had hoped to extend as part of a deal, will expire for many as well.

In the first week of January, Congress could scramble and get a quick deal on taxes and the $109 billion in automatic spending cuts for 2013 that most lawmakers want to avoid.

Once tax rates go up on January 1, it could be easier to keep those higher rates on wealthier taxpayers while reducing them for middle- and lower-income taxpayers. Lawmakers would not have to cast votes to raise taxes.

Some lawmakers expressed guarded hope that a short-term deal on deficit reduction could be reached in the next week or so, with a longer, more permanent deal hammered out next year.

But a short-term deal would need bipartisan support, as Obama has said he would veto a bill that does not raise taxes on the wealthiest Americans.

Democratic Senator Kent Conrad, chairman of the Budget Committee, said Obama and Boehner are not that far apart and that both sides should keep pushing for a long-term big deal.

"I would hope we would have one last attempt here to do what everyone knows needs to be done, which is the larger plan that really does stabilize the debt and get us moving in the right direction," Conrad of North Dakota told Fox News Sunday.

But most Republicans are now looking past January 1 to what they consider their next best chance of leveraging Obama for more cuts in the Federal budget - a fight over the debt ceiling expected in late January or early February. At that time, the administration will need Congress' authorization to raise the limit on the amount of money the government can borrow.

"That's where the real chance for change occurs, at the debt-ceiling debate," Republican Senator Lindsey Graham of South Carolina said on "Meet the Press."

(Reporting by Thomas Ferraro and Richard Cowan; Editing by Fred Barbash and Vicki Allen)

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U.S. House Speaker John Boehner (R-OH) arrives to speak to the media on the ''fiscal cliff'' on Capitol Hill in Washington, December 21, 2012.

WASHINGTON | Sun Dec 23, 2012 10:01am EST

WASHINGTON (Reuters) - So what now?

The U.S. House of Representatives' rejection of a bill to raise taxes on just 0.18 percent of Americans - those making more than $1 million a year - has raised questions about the Republican-led chamber's ability to approve any plan to avert the looming "fiscal cliff."

Unless President Barack Obama and the U.S. Congress can forge a deal during the Christmas and New Year's holiday season, the largest economy in the world could be thrust back into a recession because of the steep tax increases and spending cuts that are due to begin in January.

The threat of across-the-board government spending cuts and tax increases - about $600 billion worth - was intended to shock the Democratic-led White House and Senate and the Republican-led House into moving past their many differences to approve a plan that would bring tax relief to most Americans and curb runaway federal spending.

For weeks, Obama and House Speaker John Boehner, the top Republican in Congress, have struggled to find a compromise.

But after a glimmer of hope that a deal was close early this week, Boehner - apparently under pressure from anti-tax House Republicans aligned with the conservative Tea Party movement - pressed the "pause" button on negotiations. He then tried to push a backup plan through the House late on Thursday, only to see his fellow Republicans kill it.

Where do Obama and Congress go from here? Here are some possible scenarios.

* Obama and Boehner go back into their secret negotiations.

Before Boehner started touting his failed "Plan B" to boost taxes on those who make more than $1 million, he and Obama were moving closer together on a plan to raise taxes on certain high-income Americans and cut spending. They could pick up where they left off and quickly cut a deal to bridge the gap.

But a compromise with possibly $1 trillion in new taxes and $1 trillion in new, long-term spending cuts could be a tough sell for both Republicans and Democrats in Congress.

Boehner would have to persuade enough Republicans on the idea of tax increases. Obama, meanwhile, would have to get Democrats in Congress to back cuts to some social safety net programs such as Social Security pensions and Medicare and Medicaid health insurance for the elderly and poor. House Republicans appear to be the tougher sell.

* A huge drop in the stock market sends a loud message to Washington politicians to stop arguing and cut a quick but meaningful deal.

That is what happened in late September 2008, after Congress rejected a massive financial bailout package despite warnings by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson of an economic collapse if the bill failed.

The Dow Jones Industrial Average plunged more than 700 points and Congress quickly reversed course, approving the $700 billion Troubled Asset Relief Program just days later.

The "fiscal cliff" may not be as dramatic a situation, but the tax increases and cuts in federal spending could deal a stiff blow to the economy.

* No deal happens in the dwindling days of 2012 and the U.S. government jumps off the fiscal cliff - at least temporarily.

On January 1, income taxes would go up on just about everyone. During the first week of January, Congress could scramble and get a quick deal on taxes and the $109 billion in automatic spending cuts that most lawmakers want to avoid.

Why could they reach a deal in January if they fail in December?

The reason would be that once taxes go up, it would be easier to allow a few of those increases to remain in place - mostly on the wealthy - and repeal those that would hit middle- and lower-income taxpayers.

Such a scenario would mean that no member of Congress technically would have to vote for a tax increase on anyone - taxes would have risen automatically - and the only votes would be to decrease tax rates for most Americans back to their 2012 levels.

* No deal occurs for another six weeks or so.

If Congress does not raise the nation's debt limit, by mid-February the Treasury Department likely would exhaust its ability to borrow. That would put the nation at risk of defaulting on its debt.

Republicans have withheld their approval of the debt-limit increase as leverage to try to get the kind of "fiscal cliff" solution they want: Fewer increases in spending and taxes, and more cuts to Social Security, Medicare and Medicaid.

This is the strategy they employed in mid-2011 during the last fight over the debt limit, which is about $16.4 trillion.

Republicans wrung spending cuts out of Democrats in return for new borrowing authority, but paid a political price. Global financial markets were rocked by the long uncertainty brought on by the standoff in Congress, one ratings agency downgraded U.S. credit standing and Republicans saw their public approval ratings sink.

* Boehner decides on a gutsy move: Call a House vote on a bill that would raise tax rates for families with net annual incomes above $250,000, exactly what Obama has sought.

The plan could pass the House with strong Democratic support and some Republican votes. As soon as it passed, the House likely would leave town for the rest of the year without addressing other Obama priorities such as increasing the government's debt limit.

* A partial deal is struck at any point.

Congress could pass a plan that would put off most of the income tax increases that are due in January, or extend some other expiring tax breaks - namely one to prevent middle-class taxpayers from being subject to higher tax rates aimed at the wealthy under the alternative minimum tax.

* Stock markets do not tank and Washington politicians conclude that the "fiscal cliff" is not such a bad thing.

Under this scenario, Congress and the White House could continue sniping at each other throughout 2013 and 2014 as they try to revamp tax policy and impose long-term spending cuts.

(Editing by David Lindsey and Will Dunham)

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U.S. President Barack Obama hosts a bipartisan meeting with Congressional leaders in the Roosevelt Room of White House to discuss the economy, November 16, 2012. Left of President Obama is Speaker of the House John Boehner.

WASHINGTON | Sun Dec 23, 2012 12:49am EST

WASHINGTON (Reuters) - The "fiscal cliff" deadline is days away and the U.S. Congress and President Barack Obama have left town for Christmas.

But even if they were still here, it wouldn't have mattered, according to Steny Hoyer, the second-ranking Democrat in the House of Representatives. He says they were going nowhere to resolving the disagreement over how to fix the nation's fiscal problems.

Last month's dreams of a "grand bargain" of tax hikes and spending cuts seem long gone. They had been reduced to more modest bargains in mid-December, and as 2013 approaches, are on the verge of relegation to a "stop-gap measure," at best the sort of temporary fix that Congress undertook in 2011.

A stop-gap that puts everything off for a while but resolves nothing is now the most promising alternative, if there is to be one, to the across-the-board tax hikes and spending cuts described as a "fiscal cliff" because they threaten to send the U.S. economy plunging into another recession.

It is also the way fiscal showdowns have ended in Washington in recent years.

Such a fix, at best, would delay the spending cuts and tax hikes further into 2013 as well as work to address in a long-term way a government budget that has generated deficits exceeding $1 trillion in each of the last four years. Even worse, it would set up a huge fight in January and February over raising the U.S. debt ceiling, which controls the amount of money the federal government can borrow.

Dysfunction in Washington was specifically cited as one of the reasons rating agency Standard & Poor's cut the U.S. debt rating to AA-plus after a battle over the debt ceiling in 2011. That alone - not to mention going over the cliff - could lead to another rating cut.

At worst, the new year could start with a full-fledged jump off the 'cliff,' with an understanding, communicated to financial markets, that Congress and the White House would come back and try again for a solution.

Given the apparent deadlock, some congressional aides this week said that Washington needed to begin telegraphing to Wall Street that markets should not panic if a "fiscal cliff" deal is not struck in December.

The goal, one aide said on condition of anonymity, is to avoid starting 2013 with a steep stock market drop like the one the U.S. suffered in 2008, when the country's financial industry was falling apart and Congress was divided over what to do.

On Friday, Obama acknowledged that only small steps might be possible with so little time remaining.

Those, the Democratic president said, would consist of extending benefits for the long-term unemployed and keeping income tax rates low for 98 percent of Americans - meaning raising taxes on households with net incomes above $250,000 a year but not for those earning less.

He held out the possibility of something "comprehensive," as he put it, but it had a hollow ring at the close of a work week that saw House Speaker John Boehner step back from negotiations and pursue a partisan plan that even some of his fellow Republicans could not stomach.

MARKET PRESSURE

The steps that Obama outlined were immediately rejected by Republicans, who have given ground on their previous steadfast opposition to any tax hikes but are still demanding that the White House agree to more substantial spending cuts.

"The president has failed to offer any solution that passes the test of balance," declared Boehner spokesman Brendan Buck, minutes after the end of Obama's statement on Friday.

On Saturday, a spokesman for Senate Republican leader Mitch McConnell was similarly dismissive, noting Obama's call had neither bipartisan support nor spending cuts to ride along with tax increases.

McConnell, on Friday, suggested bringing up a House-passed bill that extends current tax rates for all Americans, including the top earners, and then pushes for comprehensive tax reform next year that theoretically could raise new revenues to help cut deficits.

But Obama has promised repeatedly to veto any extension of the expiring Bush-era tax cuts that fail to hike rates for the wealthy.

And Democrats, who control the Senate, have dismissed the McConnell idea, arguing that Obama ran his successful 2012 re-election campaign on a promise of forcing the wealthy to bear more of the burden of deficit reduction.

Democratic aides in Congress think their own bill implementing Obama's $250,000 income threshold, which passed the 100-member Senate in July with 51 votes, could breeze through this month, or next year after the "fiscal cliff" is breached.

The prospect of a breach is being discussed far more seriously now, and not just as a bluff or to set up the other side for blame.

"I think we're going to go over the cliff," said Republican Representative Patrick Tiberi of Ohio. "I don't see something getting done."

In an MSNBC interview Friday, Hoyer, a 31-year veteran of Congress from Maryland, said it wouldn't matter if everyone was in Washington instead of on holiday.

"Frankly, we've been in town for four weeks and members haven`t been doing much," he said, calling it "one of the least productive times that I've been in Congress."

Even Obama speaks of "a mismatch" between how people are thinking about the looming tax hikes and spending cuts "outside of this town and how folks are operating here. And we've just got to get that aligned," he said in his statement.

ITG Investment Research Chief Economist Steve Blitz on Saturday said sliding the "fiscal cliff" negotiations into the new year was not a huge deal. "I think markets will pressure for a deal in January," he said.

The "pressure" could be in the form of a significant stock market drop, which would hit workers' retirement plans, threaten to deter consumer and business spending, and possibly rattle other countries' economies at a time when the global economy is far from robust.

(Additional reporting by Rachelle Younglai; Editing by Martin Howell and Paul Simao)

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1 of 10. U.S. President Barack Obama waves next to first lady Michelle Obama as they prepare to depart Joint Base Andrews outside Washington, for their holiday trip to Hawaii, December 21, 2012.

KAILUA, Hawaii | Sat Dec 22, 2012 6:35pm EST

KAILUA, Hawaii (Reuters) - Taking what promised to be a very brief Christmas break from the ongoing struggle to avoid the "fiscal cliff" of tax hikes and spending cuts, President Barack Obama relaxed with his family on Saturday at a beach retreat in Hawaii.

Congress was to return to Washington next Thursday and Obama has pledged to work with lawmakers to strike a deal to avoid the economic shock from tax and spending measures set to take effect on January 1 if a deal can't be reached, which many economists say could push the U.S. economy back into recession.

The president is expected to indulge in some of his favorite pastimes on the island where he was born and raised: golf, an expedition for the local treat "shave ice," and an evening out with family and friends. He hit the links at the nearby Marine Corps base under sunny skies on Saturday afternoon.

On Sunday, he is expected to attend funeral services for Senator Daniel Inouye, the long-serving Democrat from Hawaii who died on Monday, but the president has no other public events on his schedule.

On Saturday, Democratic Senate Majority Leader Harry Reid said he had urged Hawaii Governor Neil Abercrombie, a Democrat, to name Inouye's successor "with due haste."

"It is critically important to ensure that the people of Hawaii are fully represented in the pivotal decisions the Senate will be making before the end of the year," Reid, of Nevada, said in a statement.

Obama's idyll was not expected to last more than four days, and he will likely retrace the more than 4,800-mile trip from the Aloha State to Washington after Christmas in a bid to cut a deal with Republicans, who failed on Thursday to agree on competing tax and spending bills of their own.

Before leaving Washington on Friday evening, Obama urged Congress to come up with a stopgap measure to spare the U.S. economy the jolt of $600 billion in tax increases and spending cuts economists say would likely derail the economy.

The president asked lawmakers for a stripped-down deal to continue lower tax rates on middle income earners and extend unemployment insurance benefits to avoid some of the worst effects of the "fiscal cliff" in the new year.

Obama's family holiday, in a quiet beach front community on the other side of the island from bustling Honolulu, should also provide some respite from the somber focus on the Newtown, Connecticut, school massacre and the consequent bitter debate over measures to change America's gun culture and prevent violence.

The president's weekly radio and Internet addresses, which in recent weeks have centered on his argument for extending tax cuts for all but the wealthiest Americans, on Saturday offered holiday greetings to U.S. military forces.

(Reporting By Mark Felsenthal and Richard Cowan; Editing by Vicki Allen, Todd Eastham and Paul Simao)

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Republican Florida Governor Rick Scott speaks at a meeting of the Latin Builders Association in Miami, Florida January 27, 2012.

MIAMI | Sat Dec 22, 2012 5:56pm EST

MIAMI (Reuters) - Florida's Republican governor wants President Barack Obama to invoke federal law and order a cooling-off period if nearly 15,000 longshoremen walk off the job in a looming strike that would be a big blow to the state's economy, according to a letter he sent the president this week.

The International Longshoremen's Association union and the U.S. Maritime Alliance grouping of shippers and ports have been bargaining since March but reportedly remain far from a deal covering cargo handling at 15 ports on the U.S. Gulf and eastern coasts.

In October, when a previous contract expired, the sides agreed to a 90-day extension of terms that runs out on December 29.

Florida ports in Miami and Fort Lauderdale would be directly hit by a strike or lockout but a stoppage would also rattle overall transport and trade, which accounts for 550,000 jobs in the state and $66 billion in economic activity, Florida Governor Rick Scott said in a letter dated Thursday.

"The threat to national safety and security that would result from mass closure of ports cannot be overstated," Scott told Obama.

Scott said Obama had the power under 1947's Taft-Hartley Act to prevent or interrupt a work stoppage at the ports. Presidents Richard Nixon and George W. Bush both used Taft-Hartley, which calls for 80-day cooling-off periods and mediation, Scott said.

"The Taft-Hartley Act provides your administration with tools that can help avoid this threat," Scott said. "On behalf of the State of Florida, I respectfully request that you invoke the act when the contract ... expires at the end of the month."

(Reporting By Michael Connor in Miami; Editing by Cynthia Johnston)

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