Obama, GOP Crush Stocks on Path to Fiscal Cliff Showdown

Lawmakers have three days to broker a deal with lawmakers before taxes automatically rise and spending cuts take hold, a combination that could push the economy into a recession, according to Congressional Budget Office calculations.

On Thursday, fiscal-cliff negotiations also moved stocks sharply. Markets fell after Reid said Republicans are stalling in finding a solution. "I don't know time-wise how it can happen now," he said at the time.

The S&P 500 rallied late on Thursday after Rep. Eric Cantor (R., Va.) said on Twitter the House of Representatives will meet on Sunday, Dec. 30, as Congress works to broker a last-minute deal.

"The House may be in session through Wednesday, Jan. 2," he wrote in a follow-up post to the social network.

In a Senate chamber speech late on Thursday, McConnell said President Obama had spoken to the Senate's GOP leadership about the prospect of reviving talks. While McConnell expressed skepticism on the timing of Obama's outreach, he added, "We might finally start talking. ... Hopefully there is still time for a deal of some kind."

In a second Senate floor address Thursday, Reid replied to McConnell, saying he would be willing to act on a "reasonable" proposal offered by House or Senate Republicans.

Still, across the aisle, some Republicans maintained skepticism of a deal on Thursday. Sen. Bob Corker (R., Tenn.) said on Thursday that President Obama's meeting today with top GOP leaders was likely little more than window dressing.

"It's feeling very much like an optical meeting, not a substantive meeting," Corker said in a meeting with reporters Thursday.

The presence of Kerry and Geithner at Friday's meeting between President Obama, and Democratic and Republican congressional leadership underscore the wide-reaching impact of the fiscal cliff.

Geithner said on Wednesday he will do all he can to create a cushion for lawmakers. He said in a letter to Reid that the federal government will reach its $16.394 trillion statutory debt limit on Dec. 31.

Geithner said the Treasury is planning "extraordinary measures" to postpone defaulting on $200 billion in bond payments and create some "headroom" for Washington beyond New Year's Day.

If lawmakers don't reach a cliff agreement, the Congressional Budget Office estimates a mix of tax increases and spending cuts will reduce the government's budget deficit by roughly $500 billion a year, a move that could put the U.S. economy in recession next year and cause unemployment to surge to 9%.