President Obama's holiday break ends early due to fiscal cliff talks

WASHINGTON

Mr. Obama is leaving Hawaii Wednesday night, while the first lady, Malia and Sasha will remain on vacation.

Unless the president and congressional Republicans can work out a plan by Monday, tax increases and budget cuts will go into effect Jan. 1.

While some economists say failure to reach an agreement could send the country back into recession, others say the start of 2013 may turn out to be far less bleak than feared.

Even if there is no deal by the end of the year, businesses and consumers would likely not panic as long as some agreement seems imminent. Also, the two sides may strike a short-term agreement that postpones spending cuts until spring.

"The simple conclusion that going off the cliff necessarily means a recession next year is wrong," says Lewis Alexander, an economist at Nomura Securities. "It will ultimately depend on how long the policies are in place."

But the president said just last week that he is a "hopeless optimist" and believes a budget deal can be reached in time.

The Associated Press contributed to this report.

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