USA Down to the fiscal cliff wire, with no solution in sight

NEWYORK - USA Down to the fiscal cliff wire, with no solution in sight. The latest edition of political “blinksmanship” pits President Barack Obama and Democrats against Speaker John Boehner and Republicans on how to avoid the fiscal cliff — automatic tax increases for everyone and deep spending cuts including for the military that will be triggered in the new year without an agreement.

While the focus now is on a possible agreement in coming days or weeks, anti-tax crusader Grover Norquist told CNN on Monday that the nation should gird for long-range battle.

“This is a long fight. It’s four years of a fight. It’s not one week of a fight,” said Norquist, who has threatened to mount primary challenges against Republicans who violate a pledge they signed at his behest against ever voting for a tax increase.

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With neither side showing any sign of blinking, however, the battlefield will probably shift to the Senate this week after GOP disarray in the House stymied any progress before Christmas.

Congress and the president are taking a holiday break, with plans to return to work Thursday to try to find a deal in the final five days of the year.

Economists warn that failing to avoid the fiscal cliff could spark recession, and stocks opened lower Monday amid no sign of the Washington impasse ending.

According to multiple Democratic and Republican sources, no weekend conversations occurred between the White House and Senate leaders from either party or their aides.

The main dispute continues to be over taxes, specifically the demand by Obama and Democrats to extend most of the tax cuts passed under President George W. Bush while allowing higher rates of the 1990s to return on top income brackets.

Republicans oppose any kind of increase in tax rates, and Boehner suffered the political indignity last week of offering a compromise that his colleagues refused to support.

While both sides say they want to avoid the fiscal cliff, signs are emerging that a deal would come after the new year to blunt the harshest impacts. Under that scenario, legislators would vote to lower taxes from the higher rates that will go into effect in January when the Bush cuts expire, with the new top rates staying intact.

The sources described to CNN three possible options for moving ahead, all resting with Senate Majority Leader Harry Reid of Nevada.