The Dow Jones industrial average fell 7.5 percent since Oct. 5. (Dawn Megli/Neon Tommy)

The Congressional Budget Office issued warnings that tax hikes and spending cuts could bring the U.S. back into a recession, according to the Daily Beast.

The $600 billion tax hikes and spending cuts are due to take place Jan. 1.

The Dow Jones industrial average fell 7.5 percent since Oct. 5, according to the Wall Street Journal.

The Wall Street Journal reports:

President Obama and congressional leaders are hoping to reach a deal that would avoid triggering the automatic austerity measures in the pipeline. But in a country increasingly divided, it is unclear whether the Democrats and Republicans will be able to reach a compromise.

President Obama at a news conference last week ruled out any agreement with Republicans to extend the Bush-era tax cuts for those making more than $250,000 a year. He accused Republicans of wanting to hold the middle class hostage while "we debate tax cuts on the wealthy."

Reach Senior News Editor Hannah Madans here.