Time is running short ahead of a looming Jan. 1 deadline for U.S. lawmakers to reach a deal to avoid the so-called fiscal cliff that some analysts predict could cripple the U.S. economy and send economic shockwaves into other nations, including Canada.

If Republicans and Democrats can't reach a deal, George W. Bush-era tax cuts will automatically end and a withdrawal of government program spending will kick-in with the start of the new year.

Lawmakers have spent roughly two years meeting to try and reach a deal, but have so far been unable to break the stalemate.

Now Congress is in recess until Thursday, which will leave just four days to reach a deal before the deadline ā€“ a near impossible task, according to some.

Paul Ferley, assistant chief economist at RBC Economics, said lawmakers will do their best to minimize the damage if the fiscal cliff can't be avoided.

"It is possible that the tax rates could all move up come Jan. 1, and it is fairly sizable in terms of the tax increases. Now, if they're close to a deal I think you'll have the administration and members of Congress emphasizing that they're on the verge of a deal and those tax hikes would be quickly reversed," Ferley told CTV's Canada AM.

"The intent of getting that message out is that you don't want households pulling back and not spending. We're seeing signs of maybe some improvement in growth in the U.S. but it's pretty modest and what you don't want to see now is anything that holds back that spending."

On Friday, a plan put forward by House Speaker John Boehner collapsed. His proposal would have allowed tax increases on incomes over $1 million.

That led Sen. Joe Lieberman to predict Sunday that lawmakers will likely be meeting right down to the last minute, ringing in the new year in fiscal cliff meetings.

Lieberman said the Friday development shook his faith that a deal would be reached.

"It's the first time that I feel it's more likely we'll go over the cliff than not," he said.

"If we allow that to happen it will be the most colossal consequential act of congressional irresponsibility in a long time, maybe ever in American history because of the impact it'll have on almost every American," said Lieberman, a Connecticut independent.

Even those who can conceive the possibility of a deal don't have high expectations.

Sen. Kay Bailey Hutchison, a Republican from Texas, said she expects "it is going to be a patch because in four days we can't solve everything."

Wyoming Sen. Jon Barrasso, a member of the Republican leadership, predicted the new year would come without an agreement. He said the White House is responsible for the failure.

"I believe the president is eager to go over the cliff for political purposes. He senses a victory at the bottom of the cliff," he said.

Democratic Sen. Kent Conrad of North Dakota was stunned by Barrasso's suggestion that that only U.S. President Barack Obama could stick-handle an agreement.

"There are 535 of us that can provide leadership. There are 435 in the House, 100 in the Senate and there is the president, all of us have a responsibility here," he said. "And, you know what is happening? What is happening is the same old tired blame game. He said/she said. I think the American people are tired of it. What they want to hear is `What is the solution?'"

Obama and Congress are on a short holiday break. Congress is expected to be back at work Thursday and Obama will be back in the White House after a few days in Hawaii.

If lawmakers fail to reach a deal, Ferley said there will be an intense effort to convince Americans that there's no reason to panic.

"They don't want households getting nervous and holding back on spending because of the threat of a crisis," Ferley said.

Before Obama left for his break in Hawaii, he scaled back his hopes. He had originally called for a sweeping budget bargain, but by Friday had reduced his goal to a limited measure that would extend the Bush-era cuts for most people, and put the scheduled federal spending cuts on hold.

Obama also urged Congress to extend jobless benefits for the long-term unemployed. If that measure isn't passed, some two million Americans will be cut off at the end of the year.