The fiscal cliff involves US$600 billion in automatic tax hikes and spending cuts effective in early 2013 if US lawmakers fail to agree on reducing the budget deficit.
Congress, Obama resume 'fiscal cliff' negotiations
With five weeks left to broker deal, Congress and Obama resume talks to save economy
Congress returns from its week-long Thanksgiving holiday today, as lawmakers and US President Barack Obama try to avert a looming fiscal crisis that could send the entire US economy plunging into recession again.
Officials in Washington are hoping to find a way to avoid what has been described as a year-end "fiscal cliff": a convergence of tax hikes and massive spending cuts, including slashes to the military, which some experts say could possibly spark another crippling slowdown.
Both Republicans and Democrats are well aware of the need for the country to get its fiscal house in order, as America tries to rein in a huge debt and reduce deficit spending.
After months of stalemate, congressional leaders met on November 16 with Obama - who is deemed to have a stronger negotiating hand after handily winning re-election.
Just five weeks remain in the calendar year to conclude an agreement before the expiration of tax cuts put in place during the presidency of Obama's predecessor, George W. Bush.
Obama has said any deal he concludes will have to include an increase in taxes on the wealthy. But he proposes to keep Bush-era tax rates for individuals who make less than US$200,000 per year and families earning less than US$250,000.
Republicans insist that raising taxes on the top earners will be counterproductive and will slow economic growth, ensuring that the world's No 1 economy will continue to be plagued by stagnation.
Some experts said there was no need for a "grand deal" by the year end because politicians could give themselves an extension by passing new legislation.
"Anytime Congress puts handcuffs on itself, it still has the key to those handcuffs. It can open the handcuffs anytime [it wants] or say, 'OK, we'll change the lock'," said Roberton Williams at the Tax Policy Centre, an independent think tank.