President Barack Obama is likely to leave his vacation in Hawaii to return to Washington as early as Wednesday to address the unfinished “fiscal cliff” negotiations with Congress, an administration official said on Tuesday.

As the clock ticks toward a Jan. 1 deadline, negotiations to avert a sharp rise in taxes and deep spending cuts have stalled, worrying world financial markets.

Obama and congressional lawmakers left Washington on Friday for the holidays with talks to avert the fiscal disaster in limbo.

When Obama returns, probably early on Thursday, the focus will shift to the U.S. Senate after Republicans in the House of Representatives failed to pass their own budget measures last week.

Obama is expected to turn to a trusted Democratic ally, Senate Majority Leader Harry Reid, to help craft a quick deal.

White House aides began discussing details of the year-end budget measure with Senate Democratic counterparts early this week, a senior administration official said on Monday

The president will also need at least tacit approval from Senate Minority Leader Mitch McConnell to insure Republicans will permit passage of what is likely to be a stripped down bill that prevents taxes from rising on all Americans.

The measure may not, however, contain difficult spending cuts both parties had sought to speed deficit reduction.

McConnell, who is up for re-election in 2014, has been a cautious participant in the process. His spokesman has said it was now up to Democrats in the Senate to make the next move.

The fiscal cliff legislation must then also pass the House of Representatives, which failed last week to approve Speaker John Boehner’s proposal to extend tax breaks for all Americans earning less than $1 million a year.

Conservative Republicans balked at any tax increases at all and withdrew support for the measure, which never came to a vote.

The next session of the Senate is set for Thursday, but the issues presented by the fiscal cliff – across-the-board tax increases and indiscriminate reductions in government spending – were not on the calendar.

The House has nothing on its schedule for the week, but members have been told they could be called back at 48 hours notice, making a Thursday return a theoretical possibility.

Obama and his family arrived in Hawaii early on Saturday and have devoted their time to spending the holiday together.

The president attended the funeral of long-time Hawaiian Senator Daniel Inouye on Sunday and spoke briefly on the holiday to soldiers at a Marine Corps base near the vacation house his family is using in Kailua, Hawaii.

(Reuters)