Speaking to reporters after meeting with Senate Majority Leader Harry Reid, D-Nev. and speaking with House Speaker John Boehner, R-Ohio, Obama said it's time to put politics aside.
"We move forward together or we don't move at all," he said. "Nobody can get 100% of what they want. This is not a contest between parties."
Obama said he is hopeful that lawmakers can reach a compromise that will be approved by both the House and Senate that he can sign before Jan. 1.
He said he hopes everyone would calm down during the holidays.
Obama made the plea after Boehner was unable to get enough support among House Republicans for his "Plan B," which would have let tax rate cuts expire for those earning more than $1 million, patched the alternative minimum tax so it does not hit more middle class Americans, and deal with the estate tax issue. It also contained two bond provisions.
If Congress fails to take action by Jan. 1, tax rate cuts will expire for everyone and the sequester -- $1.2 trillion of across-the-board federal spending cuts - will automatically take effect, possibly throwing the Nation into a recession.
Muni market participants fear any compromise effort could contain a 28% cap on the value of tax exemption, which Obama has proposed and Boehner has considered. Talk of the cap is already making muni bonds more expensive, experts say.