Now it's hoped congress can reach a scaled back agreement that would extend the tax cuts for households earning less than 250-thousand dollars.
The sticking point is taxes. Republicans want all the tax cuts continued. Democrats want those earning more than 250-thousand dollars to return to the tax rates of the 1990's.
Financial advisor Troy Reinahrt with Northwest Quadrant Management, says if agreement isn't reached, a lot of people will be hurt.
"If you take all the taxes that are going to get raised on the middle class and rich and all the federal spending cuts, it will be a three and a half to five percent drag on the economy. When the economy is only growing at three percent, it will cause us to go into recession."
President Obama and congressional leaders are back in Washington trying to work out a deal before the end of the year.