Watch - obama optimistic about fiscal cliff

US President Barack Obama says he hopes for deficit reduction framework by Christmas as the country's top Republican lawmaker says he is optimistic they can avert fiscal crisis, but without raising tax rates.

President President Obama, said on Wednesday he hopes he and Congress can reach agreement to avoid the looming "fiscal cliff" and shrink the budget deficit before Christmas, and urged supporters to press lawmakers to agree to a deal.

"Our ultimate goal is an agreement that gets our long term deficit under control in a way that is fair and balanced. That kind of agreement would be good for our businesses, it would be good for our economy, it would be good for our children's future and I believe that both parties can agree on a framework that does that in the coming weeks. In fact, my hope is to get this done before Christmas," he said at the White House.

The president faces an urgent challenge to prevent the gridlock that scarred his first term as fears grew that politicians will fail to cut a deal to stop the economy falling over a 'fiscal cliff'.

More than $600bn (£380bn) of tax rises and cuts in government spending are due in early January.

Failure to avoid the cliff will plunge the world's largest economy back into a slump and disrupt the global economy's still fragile global recovery.