President Obama will meet with lawmakers on Friday to begin preliminary discussions on a way to avoid the fiscal cliff, which looms only six weeks away.
In his opening salvo in negotiations over the fiscal cliff, President Obama is asking Republicans to pass a $1.6 trillion in tax increase on Americans making over $250,000 a year.
That figure is twice what he asked from Congress during last year's showdown that ultimately led to the fiscal cliff compromise, when Obama's political position was much more precarious.
But after a resounding victory in the election, Obama sees a mandate for finally raising taxes on wealthy Americans to the levels they paid under Bill Clinton.
Republicans are hoping they can avoid the tax increase by offering a cap on deductions, which some wealthy people use pay actual tax rates far lower than many middle-income people. Democrats are unlikely to take that deal.
"I don't see how you do this without higher rates. I don't think there's any feasible, realistic way to do it," said Treasury Secretary Tim Geithner.
"When you take a cold, hard look at the amount of resources you can raise from that top 2 percent of Americans through limiting deductions, you will find yourself disappointed relative to the magnitude of the revenue increases that we need."
Reducing the deficit by raising taxes on the wealthy was one of Obama's campaign promises back in 2008, and it looks like he finally has enough congressional and popular support to do it.
"It was an intrinsic part of his campaign, and the public supports it. So what more do you want?" said Michigan Democratic Representative Sander M. Levin.
Obama also plans to cut spending by $1.1 trillion, a move that will be less popular, but one that is seen as necessary to bring the federal deficit back under control.
Republicans have not yet responded with a counteroffer, though many balk at raising taxes in any way, a move that goes against one of the central pillars of the party in its current state.
Both sides are being circumspect so far. While everyone acknowledges a compromise is necessary, no one wants to seem like they gave in too easily.
But time is on Obama's side, as most of the changes enacted by the fiscal cliff align more closely with Democratic positions. While the economy risks recession if it does come to that, polls show that a large majority of Americans would blame the Republicans if that happened.
Expect this to go down to the wire. Have fun on New Year's Eve, Congress.