The Year in Review 2012: U.S. economy poised on edge of 'fiscal cliff' Grab your golden parachutes: The U.S. economy is about to go cliff diving heading into 2013. Odds were against President Obama and congressional Republicans reaching a deal to avert the tax hikes and spending cuts set to kick in Jan. 1 dwindled as 2012 drew to a close despite a flurry of last-minute meetings. Politicians cut their Christmas vacations short -- Obama returning from Hawaii on a red-eye flight Thursday -- to again tackle the cliff. An added worry that surfaced was Treasury Secretary Timothy Geithner's letter to Congress warning the United States would hit the $16.4 trillion debt ceiling New Year's Eve. Default was not imminent, however, he said, because there were accounting tricks he could use to give the government a $200 billion cushion -- but the respite would not last forever, not even two months. The smart money was saying it was increasingly likely Congress would allow the economy to go over what Federal Reserve Chairman Ben Bernanke dubbed the "fiscal cliff" because it would make it that much more politically palatable for Republicans to vote to lower taxes on those earning less than $250,000 -- a level on which Obama has been insisting but has signaled could rise slightly -- than to vote now to allow taxes to rise on everything more than the first $250,000 earned. Allowing tax rates to rise to where they were during the Clinton administration and allowing a number of other tax cuts to expire, including the reduction of the Social Security payroll tax, means that first week's pay in 2013 would be an average $50 lighter. Additionally, 2 million people on extended unemployment benefits stand to be cut off. The U.S. Constitution requires all tax legislation to originate in the House. What the House has passed this session are bills that would preserve lower tax rates for everyone -- something Obama vowed he would not accept, not this time, although he caved to the idea in 2010, the last time the rates were set to sunset. House Speaker John Boehner, R-Ohio, whose own last-ditch effort, known as Plan B, failed to earn support in his caucus, has told the Senate it's up to the upper chamber, that senators should take the House bill, amend it and send it back to the House for action. The House is already sitting on a Senate-passed bill that would preserve the lower tax rates for 98 percent of taxpayers, including 97 percent of small businesses, but Boehner has refused to allow the bill to come up for a vote despite pleas from Obama to approve the measure to provide some certainty that would allow employers to go ahead with plans for the New Year and keep the economy from falling back into recession. "Just as our economy is really starting to recover and we're starting to see optimistic signs, and we've seen actually some upside statistics from a whole range of areas including housing, now is not the time for more self-inflicted wounds -- certainly not those coming from Washington," Obama said before setting off for Hawaii. I've asked leaders of Congress to work towards a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans, and lays the groundwork for further work on both growth and deficit reduction. ... Simple, maybe. Politically expedient for Republicans who adhere to Grover Norquist's no-new-taxes pledge? Not really. On his way back to Washington, Obama telephoned Boehner, House Minority Leader Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky. They met Friday. Reid, for one, was not encouraged. "New Year's Eve is fast approaching, and for decades and decades, the American people have watched the ball drop in Times Square," Reid said from the Senate floor late last week. But this year, Mr. President, the American people are waiting for the ball to drop, but it's not going to be a good drop. Reid, who said even if there was something to vote on, there wasn't enough time, also laid blame. "John Boehner seems to care more about keeping his speakership than keeping the nation on a firm financial footing," Reid said. It's obvious what's going on. He's waiting until Jan. 3 to get re-elected to speaker because he has so many people over there that won't follow what he wants. Boehner spokesman Michael Steel responded essentially by telling Reid to stuff it -- an example of the partisan rancor that virtually has paralyzed the 112th Congress. "Senator Reid should talk less and legislate more," Steel said. The House has already passed legislation to avoid the entire fiscal cliff. Senate Democrats have not.