President Barack Obama walks down the the lower steps instead of the usual longer stairway from Air Force One upon his arrival at Andrews Air Force Base, Md., Thursday, Dec. 27, 2012. The president cut short his holiday and returned to Washington as no deal appeared in sight to avoid the year-end "fiscal cliff" of higher taxes and deep spending cuts that could spin the still-fragile back into a recession. The treasury secretary warned that the government would hit its borrowing limit on Monday, the final day of the year. (AP Photo/Jose Luis Magana)

WASHINGTON - President Barack Obama was holding a last-chance meeting with Congressional leaders Friday to discuss how to avoid austerity measures that kick in next week and threaten to spin the country back into recession. Grumbling senators, called back to Washington, found themselves little to do, while the House of Representatives wasn't convening until Sunday evening.

There was no sign that a deal would be reached in time to avoid the so-called "fiscal cliff" of tax increases for nearly every American and deep spending cuts across the board.

Obama's meeting with Congressional leaders would be the first since Nov. 16. The president, who had cut short his Hawaiian holiday to return to Washington, called for the meeting as top lawmakers blamed each other while claiming to be open to a reasonable last-minute bargain.

"I don't know timewise how it can happen now," a grumpy Senate Democratic Leader Harry Reid said.

Despite early talk of a grand bargain between Obama and the top Republican negotiator, House Speaker John Boehner, that would reduce government deficits by more than $2 trillion, expectations Friday were far less ambitious.

Both the White House and Congress are in this situation because of their inability, or unwillingness, in recent years to come to terms with the country's chronic deficit spending. A bitterly divided Congress hasn't helped.

Adding pressure is this week's warning from Treasury Secretary Timothy Geithner that the government would hit its $16.4 trillion borrowing limit on Monday, the final day of the year. That would make it harder for the U.S. to pay its bills.

Republicans and Democrats said privately that any agreement would likely include an extension of middle-class tax cuts that had been set to expire at the end of the year, with increased tax rates at upper incomes —a priority that was central to Obama's re-election campaign.

The deal also would likely put off the scheduled spending cuts and extend expiring unemployment benefits, officials said.

Some in Congress say this only delays the tough decisions.

"We'll do some small deal and we'll create another fiscal cliff to deal with the fiscal cliff," Sen. Bob Corker told CBS on Friday. Corker said there has been "a total lack of courage, lack of leadership" in Washington.

Even to reach a lesser deal now, Obama and Reid would have to propose a package that Senate Republican Leader Mitch McConnell would agree not to block.

McConnell on Thursday warned, "Republicans aren't about to write a blank check for anything the Democrats put forward just because we find ourselves at the edge of the cliff."

Nevertheless, he said he told Obama in a phone call late Wednesday that "we're all happy to look at whatever he proposes."

If a deal were to pass the Democratic-controlled Senate, Boehner would have to agree to take it to the floor in the Republican-controlled House.

Boehner discussed the fiscal cliff with Republican members in a conference call Thursday. Rep. Tom Cole, an ally of the speaker, did not rule out Republican support for some increase in tax rates — which Republicans usually don't like.

Boehner, McConnell, Reid and House Democratic Leader Nancy Pelosi are all scheduled to attend Friday's White House meeting.

If a deal is not possible, it should become evident then. If that occurs, Obama and the leaders would leave the resolution to the next Congress to address in January.

Such a delay could unnerve the stock market, which performed erratically Thursday amid the developments in Washington. Economists say that if the tax increases are allowed to hit most Americans and if the spending cuts aren't scaled back, the recovering but fragile economy could sustain a shock.

But a sentiment is taking hold that Congress could weather the fiscal cliff without significant economic consequences if it acts decisively next month.

The debate over spending cuts, however, would have to start anew.

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Associated Press writers Alan Fram, Jim Kunnhehn, Charles Babington and David Espo contributed to this report.

News from © The Associated Press, 2012