A sense of deja vu gripped Washington Monday as Democrats and Republicans locked in who-blinks-first brinkmanship over taxes and spending, with pundits warning of economic chaos unless a deal is struck.
The White House will not budge on tax hikes and Republicans call the president's opening gambit ridiculous, but without a deal by the year's end the fragile US economy will plunge off what is being called "the fiscal cliff."
"I think we're going over the cliff," grimly predicted Republican Senator Lindsey Graham of South Carolina.
Appearing Sunday on CBS's "Face the Nation" show, he said he was ready to consider closing tax loopholes for the richest Americans, but only in conjunction with entitlement reform aimed at saving such programs as Medicare, Medicaid and Social Security from bankruptcy.
But Graham insisted that the president's plan when it comes to entitlement reform "is just, quite frankly a joke."
In April 2011, there were less than two hours to go to avert a government shutdown when the same protagonists, Democratic President Barack Obama and Republican House Speaker John Boehner, struck a tentative budget deal.
The hard-fought accord that eventually raised the debt ceiling later that summer came too late to prevent Standard & Poor's from downgrading the credit rating of US government bonds for the first time in the country's history.
Despite international criticism then for playing a dangerously irresponsible game of chicken, both sides are at it again refusing to compromise and counting down the clock as financial disaster looms.
The debt ceiling deal signed into law in August 2011 included a poison pill provision that would usher in across-the-board spending cuts unless Congress passed a $1.2 billion deficit reduction bill by the end of 2012.
Combined with the expiry on December 31 of a raft of tax cuts, including reduced Bush-era rates for nearly all Americans and Obama's two percent cut in payroll taxes, the risk of a new recession is very real.
The point of the "fiscal cliff" provision was to force a fiercely divided Congress and White House to stop kicking the can down the road and get serious about tackling the $16.3 trillion public debt and arcane tax laws.
Obama called in the tough-talking Timothy Geithner to be his pointman on the crisis, hoping the outgoing Treasury secretary had enough respect on Capitol Hill and economic expertise to get the job done.
But, if the Republican leadership is to be believed, things got off to a rocky start when Geithner got negotiations rolling on Thursday by laying out Obama's initial offer.
It called for nearly $1.6 trillion in new tax revenue over the next decade and $600 billion in spending cuts, including from programs Democrats cherish like Medicare, which covers health insurance for the elderly.
"I was flabbergasted. I looked him and said, 'You can't be serious,'" Boehner told "Fox News Sunday."
"I've just never seen anything like it. You know, we've got seven weeks between election day and the end of the year. And three of those weeks have been wasted with this nonsense."
Republicans said the offer doubled the amount of revenue Obama had been asking for, included new stimulus spending to offset the spending cuts, and made no specific commitments to slash costly government welfare programs.
They also balked at a provision that would see a permanent end to congressional control over federal borrowing limits, the issue that set this crisis in motion.
Boehner, whose party controls one of the chambers through which any crisis-solving bill must pass, dismissed the notion that Congress would give up powers to vote on future debt limit increases as "silliness."
"They must have forgotten Republicans continue to hold a majority in the House," he said, adding bitterly: "The president's idea of a negotiation is: roll over and do what I ask."
Budget negotiations go right to the heart of ideological differences between Democrats and Republicans on the size and scope of government. The biggest sticking point has been on tax rates for high-earners.
Obama won re-election on a platform of raising taxes on individuals who make more than $200,000 per year and on families that rake in more than $250,000, as a way of raising extra revenue to tame the deficit.
Republicans insist that raising taxes on the wealthy would hurt small business owners, slow economic growth and dampen job creation.
"There's not going to be an agreement without rates going up. There's not," Geithner told CNN's "State of the Union" program.
Republicans say they are ready to extract more revenue from wealthy Americans, but want to do so by closing tax loopholes and limiting deductions rather than by raising income tax rates.
Besides resisting tax hikes, Republicans want action on Medicare and Social Security.
Geithner insisted that Social Security, which provides government funds to the elderly, the disabled, widows and the poor, should not be on the table in the current negotiations.