As of Christmas, House members had heard nothing about returning to D.C. | John Shinkle/POLITICO D.C.'s Christmas gift: Nothing

Washington’s Christmas gift to the American people was a whole lot of nothing.

And New Year’s could be even worse with no resolution in sight to avoid tax hikes for all and deep spending cuts set to take effect in a week.


Both parties say they want a way out, but so far, Congress and President Barack Obama have come up short of a deal to extend Bush-era tax rates and head off hits to the Pentagon and domestic spending. Since Speaker John Boehner (R-Ohio) failed last week to corral his own House Republicans to keep the lower tax rates for income below $1 million, official Washington has been in a holding pattern.

( PHOTOS: Christmas at the White House)

Once-robust talks between aides to Obama, Senate Majority Leader Harry Reid (D-Nev.) and Boehner have all but ceased. Obama spent the past few days in Hawaii golfing and spending time with his family. Congress is nowhere to be seen.

As of Christmas Day, House members had not received the standard 48-hour warning to come back to Washington to resolve the so-called fiscal cliff. The reasoning is simple, aides say: Boehner and other GOP leaders aren’t going to herd 433 lawmakers back to town with nothing to do.

All of this comes after nearly two months of press conferences, White House meetings, late-night phone calls, emails, charts and graphs.

( Also on POLITICO: Why Obama isn’t caving)

Senate Democrats and the White House are now pushing a bill the Senate passed in July as little more than a messaging vessel. The only House vote came in August, when Republicans and 20 Democrats passed a bill to extend all Bush-era tax rates. That bill was never taken up by the Democratic-controlled Senate.

It’s not as if this crept up on national leaders — these deadlines were set as long as two years ago.

If Obama and Congress don’t act, roughly 30 million middle-class taxpayers will be hit by the Alternative Minimum Tax. Eighty million to 100 million Americans might have to wait until March to file their taxes because the Internal Revenue Service will have to change its processing procedures because of the AMT issue. Taxes on investment income are set to nearly double.

( Also on POLITICO: Hill GOP cool to Obama overtures)

The potential damage doesn’t end there. Special agents at the Federal Bureau of Investigation would be furloughed one day every two weeks because of the automatic cuts to defense and other spending. Other agencies face possible layoffs and furloughs. Federal agencies have 30 days after sequestration kicks in on Jan. 2 to decide how they will respond to the looming cuts.

And the House is almost certain to leave New Jersey, New York and Connecticut in the cold as prospects are dim for the lower chamber to pass an emergency spending bill to rebuild the tri-state area in the wake of Hurricane Sandy.

Washington’s paralysis even extends to the kitchen table — literally. Milk prices are poised to soar because Congress hasn’t reauthorized the farm bill — an outgrowth of the fiscal cliff crisis. Other commodities could also be hit.

After Boehner sent House lawmakers home last week, the focus instantly shifted to the Senate. Reid’s chamber returns Thursday to vote on reauthorizing key parts of the FISA Amendments Act as well as its Hurricane Sandy bill. Obama is expected to return from Hawaii on Wednesday night.

The seeming lack of urgency is feeding a growing sense of pessimism. Increasingly in private conversations, Republican lawmakers say options to resolve the fiscal cliff are dwindling.

Boehner could put a bill on the floor to extend tax rates on income below $250,000, Obama’s central campaign pledge. Doing so, however, would mark a major defeat for Republicans — and could even jeopardize Boehner’s hold on the speaker’s gavel after the Ohio Republican’s humiliating withdrawal of his Plan B proposal.

Congress could go over the cliff and hope for the best. The possible panic in the financial markets and anger among constituents over increased taxes and cuts to programs like unemployment benefits and Medicare reimbursement rates could jolt jittery lawmakers out of their inertia.

Or the two sides could defy expectations and reach a grand bargain. That’s the least likely scenario, but there is a potential path out of the impasse: If Obama were to increase his tax hike threshold from his current $400,000 to, say, $600,000 — and agree to significant cuts to entitlement programs — such a deal might pass the House with Republican and Democratic votes.

The president’s liberal supporters would no doubt cry foul. But that rough middle ground represents the closest Obama and Boehner have come to an agreement in 18 months.

The stare down over the fiscal cliff does not bode well for a host of other high-stakes issues on Congress’s plate in the months ahead.

Government funding runs out March 27, and House Republicans are sure to demand steep spending reductions to resolve that problem.

Even more worrisome, in February or March, the country is set to run up against its borrowing limit again. Last year, the legislative brawl between Boehner and Obama led to a first-ever U. S. credit downgrade.

This year, Obama insists he won’t negotiate with Republicans over the debt limit. But Boehner says he will nevertheless demand that Congress must find savings for each dollar it raises the debt cap.

Other high-profile fights are likely over immigration, gun control, Afghanistan and executive branch nominations, including a new defense secretary.