The Obama administration has warned that there is no guarantee America would not go over the 'fiscal cliff'.
It said that there could be no deal unless Republicans agreed to raise tax rates on the wealthiest.
With only a month left until the beginning of the 600 billion dollars of automatic spending cuts and tax rises that could drive the US back into recession, both the White House and Republicans are hardening their negotiating positions, the Telegraph reports.
US Treasury Secretary Timothy Geithner refused to rule out the possibility that no deal would be reached.
"That's a decision that lies in the hands of the Republicans that are now opposing increases in tax rates," he said.
According to the report, while Republicans have agreed to raise revenue through closing of tax loopholes, they have opposed President Barack Obama's plans to raise tax rates on the country's wealthy.
Geithner said that the tax rates rise was non-negotiable and claimed that the failure to reach a deal would lie squarely with the Republican-controlled House of Representatives, the report said.
"If Republicans are not willing to let rates go back up - and we think they should go back to the Clinton levels, a time when the American economy was doing exceptionally well - then there will not be an agreement," he told CNN.
"The ball really is with them now," he said, adding: "They're in a hard place".
Despite the increasingly-heated rhetoric in Washington, many analysts believe that the two sides are likely to reach a short-term deal to avert the cliff and then focus on a more comprehensive agreement next year, the report said.
"There's a lot of posturing - and this thing could fall apart, no doubt about it - but there's still a few more days where we should expect this kind of rhetoric before they start to coalesce around a deal," Jim Kessler, senior vice president for policy at the Third Way think tank, said. (ANI)