Obama shortens break to tackle fiscal deal

THE US President, Barack Obama, was planning to cut his Christmas holiday short and return to Washington in an effort to resolve the looming fiscal cliff that could push the US economy back into recession.

A White House official said Mr Obama could leave Hawaii as early as Boxing Day.

Both chambers of Congress will return to work on Thursday after their holiday break.

While there are growing signs that some members of both parties are prepared to accept a deal that raises taxes on high earners, there remains considerable distance between Republicans and Democrats and no guarantee that an agreement could pass.

The President left Washington last week after House Republicans rejected a plan that would have left tax rates in place for all but those with incomes above $US1 million ($960,000).

Mr Obama has since called for a less ambitious approach to avoid the fiscal cliff on January 1, when a series of automatic budget cuts and tax increases will come into effect.

The main obstacle remains the Republican-led House, where a bloc of conservatives has ruled out any tax increases whatsoever.

Over the last four days, Mr Obama has been playing golf and hiking on a military base on the island of Oahu, where he was raised.

It was likely to be Mr Obama's last solitude for a while.

Quick action by the President and Congress could still help the economy escape the full impact of the fiscal cliff but economists warn the consequences could be severe if the deadlock in Washington persists much longer than a few weeks.

Some hits - such as a 2 percentage point increase in payroll taxes and the end of unemployment benefits for more than 2 million jobless Americans - would be felt right away. But others, such as cuts to military and other programs, would be spread out between now and the end of fiscal 2013 in September. These could quickly be reversed if a compromise is found.