House Speaker John Boehner didn't have enough GOP votes to pass his party's "Plan B." He says President Obama and Majority Leader Harry Reid should pass a bill in the Senate first.
WASHINGTON — Unable to round up enough support, Republicans in the House of Representatives abruptly put off a vote Thursday night on a largely symbolic bill allowing tax rates to rise for households earning $1 million and up.
House Speaker John Boehner failed to unite his Republican lawmakers behind an effort designed to extract concessions from President Barack Obama in the year-end "fiscal cliff" that threatens to send the economy into recession.
In a brief statement, Boehner said the bill "did not have sufficient support from our members to pass."
At the White House, Press Secretary Jay Carney said that Obama's "main priority is to ensure that taxes don't go up on 98 percent of Americans and 97 percent of small businesses," citing statistics associated with Obama's campaign promise to increase top tax rates on household earning more than $250,000 a year.
"The President will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy," Carney said. Pointedly, the statement didn't say whether Obama would work with Boehner to revive stalled talks or turn to the Democratic-controlled Senate to try to salvage the situation.
Boehner said it is now up to Obama to first pass a bill through the Democrat-controlled Senate, led by Majority Leader Harry Reid. Democrats said Boehner should first hammer out a deal with Obama.
"The only way to avoid the cliff altogether is for Speaker Boehner to return to negotiations," said Adam Jentleson, a spokesman for Senate Democratic Leader Harry Reid.
The surprise development cast more uncertainty on the year-end budget talks that aim to prevent across-the-board tax hikes and spending cuts. The $600 billion hit to the economy could push the U.S. economy into recession. U.S. stock futures fell sharply on the news of the rebuke to Boehner.
Boehner had hoped to show he has the full support of his party by passing a bill, known as "Plan B," through the House that would limit income-tax increases to the wealthiest sliver of the population, far less than Obama wants.
But he canceled the vote after failing to round up enough support from his party and sent lawmakers home for the Christmas holiday.
Obama and Boehner aim to reach a deal before the new year, when taxes will automatically rise for nearly all Americans and the government will have to scale back spending on domestic and military programs.
Obama and Boehner have vowed they will reach a deal before then. But so far, negotiations appear to be following the dysfunctional pattern set by the 2011 battle over the debt ceiling: fitful progress alternating with public posturing. During those talks, Boehner also struggled to corral the most conservative members of his own party.
One Republican lawmaker said Boehner told them he would call Obama in hopes of setting up a meeting.
With Republicans in chaos, Boehner will almost certainly need support from House Democrats to pass a deal before the end of the year. But he will have to keep an eye on his right flank before he stands for re-election as the top House lawmaker on Jan. 3.
Alternatively, Boehner could wait until the new year to hold a vote. At that point, tax cuts passed in 2001 and 2003 will have expired for all Americans, and it presumably would be easier to pass a bill that would restore tax cuts for most.
Opinion polls show that more Americans would blame Republicans rather than Obama if they don't reach a deal before then.
Washington narrowly avoided defaulting on the U.S. government's debt in August 2011, but the down-to-the-wire nature of the effort prompted a first-ever debt downgrade and spooked investors and consumers.
This time around, concern over the fiscal cliff has weighed on markets, but analysts say investors appear to be assuming that the two sides will avert disaster.
"The markets are likely to interpret this as signaling even tougher negotiations in coming days," Mohamed El-Erian, chief executive of bond giant PIMCO, told Reuters.
Boehner's bill would have put Republicans on the record as supporting a tax increase on those who earn more than $1 million per year — a position the party opposed only weeks ago.
Obama wants to lower the threshold to families earning more than $400,000.
Lawmakers had hoped to wrap up work before the Christmas break, but leaders in both the House and the Senate have indicated they may call members back to work next week.
"The brinkmanship will continue," said a senior Republican aide. "This isn't the end of the story. More drama to come."
The Associated Press and Reuters contributed to this report
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