(Reuters) – House of Representatives Speaker John Boehner faced an embarrassing setback yesterday when he failed to unite his Republican lawmakers behind an effort designed to extract concessions from President Barack Obama in year-end “fiscal cliff” talks.
The surprise development cast more uncertainty on the year-end budget talks that aim to prevent across-the-board tax hikes and spending cuts that could push the U.S. economy into recession next year.
Boehner had hoped to show that 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.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in a statement after huddling with other Republican leaders.
Representative Harold Rogers of Kentucky said he did not know what will happen next.
Obama and Boehner aim to reach a deal before 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. The $600 billion hit to the economy could push the U.S. economy into recession.
Obama and Boehner have vowed that 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.
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 that investors appear to be assuming that the two sides will avert disaster.
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 year-end Christmas break, but leaders in both the House and the Senate have indicated that they may call members back to work next week.
Boehner said it is now up to Obama to first pass a bill through the Democratic-controlled Senate.
