U.S. President Barack Obama and key congressional leaders are set to meet Friday in their first face-to-face effort to resolve crucial government financial issues before the end of the year.

Mr. Obama summoned the lawmakers to the White House to start discussions on how the government can avoid cascading over what Washington is a calling a “fiscal cliff.” It is a financial precipice of $600 billion in mandated spending cuts to key defense and domestic programs and higher taxes for American workers set to take effect January 1 — unless the president and Congress can reach an agreement to avert them.

Both Mr. Obama, the Democratic incumbent re-elected last week, and his Republican opponents in Congress agreed last year to set the end-of-2012 deadline to resolve the contentious tax and spending issues. Neither the White House nor Congress wants the spending curbs or higher taxes to take effect, but periodic attempts to reach a compromise have failed.

U.S. economists say that allowing the spending cuts and higher tax rates to take effect could send the fragile American economy back into a recession and boost the country's jobless rate from 7.9 percent to above 9 percent. U.S. stock markets have retreated in recent days over fears that the dispute will not be resolved.

One focal point of the extended debate over U.S. financial policies is whether the wealthiest Americans should pay higher taxes. Mr. Obama has vowed to end the current tax break for households making more than $250,000 a year, but Republicans have been adamant in opposition.

Mr. Obama is calling for $1.6 trillion in additional government revenue over the next decade. Republican leaders say some revenue can be raised through an improving economy and ending some current tax deductions, rather than raising tax rates.

Senate Democratic leader Harry Reid and the top Senate Republican, Mitch McConnell, are set to join the president at the White House meeting, along with the top Republican in the House of Representatives, John Boehner, and the House Democratic leader, Nancy Pelosi.

Earlier in the week, Mr. Obama met with American labor leaders and chief executives of major U.S. corporations about their priorities in resolving the policy stalemate. The president sought their support for what he has called a “balanced” mix of increased revenue for the government and spending cuts. His financial package is aimed at eventually reducing the country's accumulated $16 trillion in debt over the next decade.

The president told a White House news conference he believes a deal can be reached.

“Both parties voted to set this deadline. And I believe that both parties can work together to make these decisions in a balanced and responsible way.”