Washington Gears Up For 'Fiscal Cliff' Showdown

There's not much time to celebrate re-election for President Barack Obama, who faces an upcoming showdown with congressional Republicans over taxes, deficits and the impending "fiscal cliff."

House Speaker John Boehner says Republicans are willing to consider some form of higher tax revenue as part of the solution - but only "under the right conditions."

All sides are setting out opening arguments for the negotiations to come.

Even before returning to Washington from his hometown of Chicago, Obama was on the phone Wednesday with the four top leaders of the House and Senate, including Boehner, to talk about the lame-duck Congress that convenes just one week after Election Day.

Obama adviser David Axelrod warned Republican leaders to take lessons from Tuesday's vote. The president won after pledging to raise taxes on American households earning more than $250,000 a year "and was re-elected in a significant way," Axelrod told MSNBC Thursday morning.

Without a budget deal to head off the fiscal showdown, the nation faces a combination of expiring Bush-era tax cuts and steep across-the-board spending cuts that could total $800 billion next year. Economists have warned that could tip the nation back into recession.

Stocks slid on Wall Street Thursday, a day after the Dow Jones industrial average logged its biggest one-day drop of the year, as investors fretted about the potential for gridlock in Washington.

The Wall Street Journal's David Wessel explains the fiscal cliff (on a cliff):