President Barack Obama said on Friday that he is "modestly optimistic" a deal to avoid the fiscal cliff can still be reached, but he warned that no one will get 100 percent of what they want.
A political summit on Friday at the White House left it to the Senate's top Democrat and Republican to work out a possible compromise to avoid the fiscal cliff, participants said.
Senate Majority Leader Harry Reid, D-Nevada, told reporters that the next 24 hours would be "very important" toward efforts to lessen the harshest impacts of the fiscal cliff, a combination of automatic tax hikes and deep spending cuts due to take effect at the start of the new year.
"Whatever we come up with is going to be imperfect. Some people aren't going to like it, some people are going to like it less," Reid said on the Senate floor after the meeting with President Barack Obama, other top congressional leaders and senior administration officials.
Reid's Republican counterpart, Sen. Mitch McConnell of Kentucky, expressed hope that he and Reid could arrive at a proposal to present to their respective caucuses "as early as Sunday."
In a statement to reporters, Obama also said that absent a deal, his latest proposal should be put to a vote, adding that he believed it would pass both the House and Senate with bipartisan support.
Congress has three days to come up with a solution before the end of 2012 brings the tax increases and spending cuts of the fiscal cliff.
Diminished hopes for a substantial agreement in Washington depressed stock indexes on Wall Street this week despite other encouraging news on the economy. Consumer confidence has also softened due to political inaction.
Economists warn that continued stalemate could trigger recession as taxes go up on everyone with the expiration of lower rates from the administration of President George W. Bush, coupled with slashed government spending, including for the military.
The late afternoon White House meeting ran just over an hour and also included House Speaker John Boehner, House Democratic leader Nancy Pelosi, Vice President Joe Biden and Treasury Secretary Timothy Geithner.
Prior to the meeting, a source familiar with the matter said Obama would propose the same framework for a scaled-back agreement that he described last week.
In his later statement, Obama described his plan as holding down tax rates on midde-class Americans -- which he describes as family income up to $250,000 -- while allowing rates to increase on top income brackets. It also would extend unemployment benefits and "lay the groundwork" for economic growth and deficit reduction.
Friday's meeting came with the Senate back in town after a Christmas holiday for a rare end-of-year appearance before a new Congress convenes early in the new year. Boehner plans to bring the House back on Sunday.
Earlier in the day, senators from both parties expressed opinions on the negotiations that ranged from optimism to frustration.
"When the dust settles and everything is said and done, federal individual income taxes are not going to go up on almost all Americans next year," GOP Sen. Lamar Alexander of Tennessee told reporters.
Democratic Sen. Chuck Schumer of New York told NBC's "Today" show he was "a little more optimistic today" about reaching a deal.
"Sometimes it's darkest before the dawn," Schumer said, noting the renewed engagement by McConnell and Boehner, the top congressional Republicans.
"The fact that (Boehner's) come back and the four of them are at the table means to me we could come up with some kind of agreement that would avoid the main parts of the fiscal cliff, particularly taxes going up on middle-class people," he added.
Republican Sen. Bob Corker of Tennessee downplayed the importance of Friday's meeting on CBS "This Morning," saying it "feels too much to me like optics to make it look like we're doing something."
"This is a total dereliction of duty at every level," added Corker, who has called for Republicans to compromise on the central issue of allowing tax rates to increase on top income brackets.
"I've been very surprised that the president has not laid out a very specific plan to deal with this, but candidly Congress could have done the same and I think the American people should be disgusted," he said.
On Thursday, McConnell vowed that his side would not "write a blank check for anything Senate Democrats put forward just because we find ourselves at the edge of the cliff."
Reid, however, argued that Republicans undermined a potentially major agreement over the past two years by refusing to compromise on their opposition to higher tax rates for the wealthy.
The principal dispute continues to be over taxes, specifically the demand by Obama and Democrats to extend most of the tax cuts passed under Bush while allowing higher rates of the 1990s to return on top income brackets.
Obama campaigned for re-election on keeping the current lower tax rates on family income up to $250,000, which he argues would protect 98% of Americans and 97% of small businesses from rates that increase on income above that level.
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