The last day of 2012 has arrived in Washington, where lawmakers now have just a few hours to reach a deal that would prevent the United States from going over the so-called "fiscal cliff."
The "fiscal cliff" is a previously agreed $600-billion package of automatic tax increases and spending cuts that could cause the economy to fall into recession.
Economists say the higher taxes would leave Americans with less money to spend, damaging the economy's growth prospects.
Senate and congressional leaders spent hours on December 29 trying to bridge their differences and are due to start meetings again later on December 31.
The leader of the Republican Party minority in the U.S. Senate, Senator Mitch McConnell, suggested on December 30 that the negotiations are not going well.
"I'm concerned about the lack of urgency here. I think we all know we're running out of time," he said. "This is far too much at stake for political gamesmanship. We need to protect the American families and businesses from this looming tax hike."
Senator Harry Reid, the leader of the Democratic Party majority in the Senate, said it is up to the Republicans to make the next move.
"At this stage we're not able to make a counteroffer," he said. "The Republican leader has told me and he's just said here that he's working with the vice president. And he and the vice president -- I wish them well. In the meantime, I will continue to try and come up with something. But at this stage, I don't have a counteroffer to make."
The expiration of tax cuts put in place in 2001 and 2003 will add an average $2,000 a year to Americans' income tax.
In an interview on the U.S. news program "Meet the Press," President Barack Obama warned that the failure to reach a deal will have a real impact on the economy.
"If people start seeing that on January 1 this problem still hasn't been solved, that we haven't seen the kind of deficit reduction that we could have had, had the Republicans been willing to take the deal that I gave them; if they [see] that people's taxes have gone up, which means consumer spending is going to be depressed, then obviously that is going to have an adverse reaction in the markets," he said.
If no deal is reached, federal government spending cuts would come into effect automatically under the Budget Control Act, which averted the U.S. debt-ceiling crisis in the summer of 2011.
Those automatic spending cuts would be applied equally across defense programs and nondefense programs and would take even more money out of the economy.
That earlier budget agreement was a compromise between Republicans and Democrats that prevented a default on U.S. government debt.
Based on reporting by Reuters, AFP, and AP