Will lawmakers' comments tank the market?

In January 1991, then-Secretary of State James A. Baker III stepped to the microphones in Geneva to discuss getting Iraq to leave Kuwait.

The talks had gone nowhere, and as soon as Baker uttered one word -- "regrettably" -- oil markets around the world went crazy.

A "regrettably" moment may come around 11 a.m. Monday, when the U.S. Senate is supposed to go into session to discuss a deal about the fiscal cliff. If you hear the word "regrettably" or anything like it, look for stocks to take a dive. That's because $600 billion or so in tax increases and spending cuts could take effect starting on Jan. 1.

Late Sunday, there was no deal, and no one voted on anything in the Senate or the House of Representatives. But there were statements of hope amid the admission that no one agrees on anything, and traders in futures markets were willing to give Congress the benefit of the doubt.

Indications were at 10 p.m. ET Sunday that U.S. stocks would open higher, with futures for the Dow Jones industrials ($INDU) up 40 points. The gain would be welcome after Friday, when the Dow fell 158 points and the major averages for December were wiped out.

There were lots of talks over the weekend. Democrats had not ruled out maintaining the tax on inherited estates at the current low rate, as Republicans prefer, the Washington Post noted. And they had been open to a deal that would allow taxes to rise on many fewer wealthy households than President Obama had proposed.

• History lesson: Why were the Bush tax cuts enacted?

Republicans were seeking tax increases only on income higher than $400,000 or $500,000 a year, while President Obama wanted to set the threshold at $250,000 a year.

Republicans were upset Sunday when Obama told "Meet the Press" that the lack of progress was the GOP's fault.
 
But the talks stopped cold after Republicans demanded that any deal must include "chained CPI" -- a new way of calculating inflation that would lower payments to beneficiaries of programs like Social Security. You can read more about chained CPI here.

The demand ultimately was withdrawn, but a bid by Senate Minority Leader Mitch McConnell, R-Ky., to get Vice President Joe Biden to help get talks started again went nowhere.

Stocks will be open for a full day of trading on Monday. The markets will be closed on Tuesday for the New Year's holiday.

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