* Sides still far apart on taxes, spending cuts
* Time needed to sell rank-and-file on compromises
* Boehner set to return to Ohio for the weekend
WASHINGTON, Dec 14 (Reuters) - The "fiscal cliff" impasse is
raising the odds that Congress will fail to meet a year-end
deadline to avert steep tax hikes and budget cuts that could
push the nation into another recession.
With talks between President Barack Obama and House of
Representatives Speaker John Boehner at an apparent standstill,
analysts said on Friday that it was increasingly likely that
Washington won't be able to reach a deal before Jan. 1.
"It's time to contemplate a plunge off the cliff," Potomac
Research Group analyst Greg Valliere wrote in a research note.
Obama has insisted that any deal must raise taxes on the
wealthiest 2 percent of U.S. households, an idea Boehner has
resisted. The two sides also are far apart on the size and
composition of spending cuts that would likely be part of a
Little progress was expected on Friday with Boehner set to
return to his congressional district in Ohio for the weekend.
Even if Boehner and Obama were to reach an agreement, they
would need time to sell rank-and-file lawmakers on the
compromises it would likely include. They also would need
several days to draw up legislation and pass it in the House and
Stan Collender, a budget expert with Qorvis Communications,
sees a one-in-four chance of that happening at this point.
"It's far more likely we'll go over the cliff and then fix
it retroactively in January," he wrote.
If Washington does not act, tax rates are due to rise for
all Americans at the beginning of next year and the federal
government will have to cut spending on military and domestic
programs across the board.
The resulting $600 billion hit could push the economy back
into recession, but the full effect likely would not be felt for
months - giving lawmakers some time after the New Year to
resolve the situation.
DEAL IN PRINCIPAL?
Representative Steny Hoyer, the No. 2 Democrat in the House,
said Congress could agree to keep current tax and spending rates
in place for several weeks if negotiators reach a deal in
principle by the end of the year but don't have enough time to
pass it into law.
That probably will be impossible if Obama and Boehner have
no deal in place, the Maryland lawmaker said.
"If we don't get an agreement of any type, then, yes, I
think you're going to run into a hard-and-fast deadline of
December 31," Hoyer said on Fox News on Thursday night.
Though the economy would likely not take an immediate hit if
lawmakers miss the deadline, failure to reach a deal could spook
financial markets, which have been relatively calm in recent
Still, the uncertainty over the cliff has weighed on markets
and overshadowed other relatively good economic news.
"The uncertainty that (the cliff) is creating is basically
holding the markets hostage in the short term," said Andres
Garcia-Amaya, global market strategist at J.P. Morgan Funds, in
Opinion polls show most Americans support Obama's demand to
raise tax rates on the wealthiest 2 percent of households and
many observers expect Republicans will ultimately go along.
The Democratic-controlled Senate has already passed such a
bill and pressure is mounting on Republicans in the House to
approve it as well.
That legislation would prevent tax hikes for everybody else,
but it would still allow spending cuts to kick in that would
hurt hospitals, defense contractors, and a range of other
sectors, analysts at International Strategy & Investment wrote
in a research note.
Expiring jobless benefits and payroll tax cuts also would
create broad headwinds for the economy.
It also would set up months of budget battles that could
create yet more uncertainty, they wrote.