Republicans and Democrats return to Washington this week with only days left to achieve what has alluded them for months: A deficit-reduction deal that prevents massive tax increases and spending cuts from devastating the economy in the New Year.

House Speaker John Boehner, R-Ohio, left town for a Christmas break late last week saying "only God knows" if a deal can be reached by year's end. President Obama a short time later advised Congress to "cool off, drink eggnog, sing Christmas carols" and return to Washington ready to deal. Then he flew off with his family to Hawaii.

But the two parties remain at loggerheads, with Republicans refusing Democratic demands to raise taxes on the wealthiest earners and Democrats resisting major spending cuts and entitlement reforms the GOP insists it must have. If they can't agree, automatic tax hikes and spending cuts would kick in and throw the economy into a tailspin.

Obama met separately with both Boehner and Senate Majority Leader Harry Reid, D-Nev., before leaving town Friday and called on Congress to approve a short-term deal that would at least prevent a tax increase on 98 percent of Americans on Jan. 1.

But Boehner on Saturday dismissed Obama's proposal, which would effectively grant the president's chief demand, higher taxes for those earning more than $200,000 a year.

"The president's solution of raising tax rates would still leave red ink as far as the eye can see," Boehner said in his weekly radio address. "And it would hurt jobs at a time when far too many of our citizens are struggling to find them."

House Republicans last week demonstrated their opposition to any tax increase by refusing to back a compromise Boehner proposed to raise taxes only of those earning $1 million a year. And Boehner later told the president privately that if a compromise is to be reached it will now have to come from the Democratic Senate, a Boehner aide said.

The speaker wants the Senate to approve a House-passed bill that would extend tax cuts for everyone.

"If the Senate wants to act on that bill, we'll certainly take a look at it," Boehner said.

Senate Minority Leader Mitch McConnell, R-Ky., echoed Boehner, saying that since Democrats helped defeat Boehner's compromise it is up to them to offer an alternative.

But Reid is backing Obama's push to raise taxes on the wealthiest. And both parties accuse the other of politicizing the issue.

"Democrats may be popping champagne corks...about bringing down [Boehner's compromise], " McConnell said, "but all their efforts to do so ... won't protect a single taxpayer from a massive tax hike next month."

Republican political strategist Ron Bonjean, who worked for the GOP leadership in both the House and Senate, said panic in the financial markets may be the only way to force the two parties to strike a deal.

The Dow Jones Industrial Average was down 120 points at the close of business on Friday, and the NASDAQ lost 29 points as fears of the fiscal cliff increased.

"The reality of a stock market crash is probably the only way Washington will strike a deal," Bonjean said. "It is likely the only scenario that could likely force the president and the speaker to allow for a deal driven by Democratic votes to pass the House."