US deal to avert ‘fiscal cliff’ cancelled as Republicans defect

Pre-Christmas plan to avoid more than $600bn spending cuts and tax rises unlikely

Efforts to avoid the dreaded “fiscal cliff” of more than $600bn in spending cuts and tax rises due to hit the US economy in early 2013 were mired in uncertainty last night after the Republican leadership in Congress was forced to abruptly cancels plans to push through a symbolic House measure in favour of raising taxes on households earning more than a $1m.

The House bill, which was cast in opposition to President Obama’s revised proposal for tax rises on households earning more than $400,000, was meant to force the Democrats to make greater concessions as talks between the two sides enter the final furlong. Instead, the Republican leadership, headed by the Speaker of the House of Representatives John Boehner, found itself without enough backing on its own side after a number of GOP representatives defected at the last minute, apparently balking at the idea of raising taxes on millionaires while giving a break to the vast majority of Americans.

As a result, what was meant to be a moment of partisan triumph for Mr Boehner, as House Republicans went on the record in support of his plan, swiftly turned into embarrassment, as he was forced to pull plans for a vote on his proposals.

The symbolic measures would not have found any favour in the Democratic Senate and had been criticised by President Obama, who could have used his veto in the unlikely event that it made it to his desk. The cancellation leaves Mr Boehner in a tight spot by exposing fault lines on the Republican side as he negotiates with the Democrats.

Meanwhile, his steadfast support for the proposals, dubbed Plan B, in the run up to last night’s about-turn, drew much criticism from the Democratic side.

In statement issued late last night, Mr Boehner, a Republican from Ohio, said the House did not vote on the measures because “it did not have sufficient support from our members to pass.” “Now it is up to the president to work with Senator [Harry] Reid [the Democratic leader in the Senate] on legislation to avert the fiscal cliff,” he said, throwing the ball in President Obama's court after failing to make headway on his own side. 

A deal is now unlikely before Christmas. Earlier on Thursday, Senator Reid said Democratic politicians would travel back to Washington DC after the holiday to hammer out a pact to pull the country back from the cliff. 

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