US House vote on fiscal cliff 'Plan B' cancelled

John Boehner has called on the Senate to act

US Republicans have cancelled a vote in Congress on tax rises they hoped would help to avert a so-called fiscal cliff.

They pulled the vote after failing to get enough support for the bill, labelled "Plan B", which would raise taxes on earnings above $1m (£614,000).
Republican leaders have said the Senate must now act, as the House of Representatives adjourns for Christmas.
A deal must be reached by 1 January, or a combination of steep tax rises and sharp spending cuts will take effect.
Analysts in the US and overseas have expressed concern that failure to reach a deal could take the US into recession.
Veto threat House Speaker John Boehner said on Thursday evening he was unable to garner sufficient votes to secure passage of the second bill, which would have ensured a permanent tax cut for 99.8% of Americans.
He said in a statement that the bill "did not have sufficient support from our members to pass".
In the wake of Mr Boehner's announcement, the White House said President Barack Obama's "main priority" would be to extend current tax rates for 98% of Americans and 97% of small businesses.

Continue reading the main story

What is the fiscal cliff?

• On 1 January 2013, a series of tax increases and huge spending cuts are due to come into force - the so-called fiscal cliff
• The deadline was put in place in 2011 as a means of forcing the president and Congress to agree on ways to save money over the next 10 years
• If they can reach a deal before 1 January, the cliff will be averted
• The fear is that raising taxes while massively cutting spending will have a huge impact on households and businesses
• Experts believe it could push the US into recession, and have a global impact on growth, especially in China and Europe

• Q&A: The US fiscal cliff
• Why is it called a 'fiscal cliff'?

The White House pledged to work with Congress, adding it was "hopeful that we will be able to find a bipartisan solution quickly".

Earlier on Thursday, the House did narrowly pass a companion bill that would cut domestic spending while protecting the defence budget.
Correspondents say the Republican plan would have had no chance of passing the Democratic-led Senate, and was in effect an effort to tell the US public that they should not be blamed if the US falls over the fiscal cliff.
The White House had threatened to veto the legislation if it had passed both chambers of Congress, saying the bill would mean tax rises on 25 million Americans making under $250,000.
A study by the non-partisan Tax Policy Center found some low-income people would see tax rises because the measure would not renew several tax cuts that were part of the 2009 stimulus package.
'Exercise in futility' On Thursday, the White House criticised Republicans, saying Mr Boehner's response to compromises from the president was "to walk away" from negotiations.
Spokesman Jay Carney said the introduction of Mr Boehner's so-called Plan B was a "multi-day exercise in futility at a time when we do not have the luxury of exercises in futility".
Mr Boehner announced the bill on Tuesday, saying he would bring forward a measure that extended Bush-era tax cuts for those earning less than $1m per year - but would not address the automatic spending cuts.
On Wednesday, the Republican leadership added a companion bill that would replace the automatic cuts with a proposal to remove cuts from defence and government operating budgets. They would be offset by reductions elsewhere in the budget.

Continue reading the main story

“Start Quote

It is positioning, theatrics, part of the negotiations, not the negotiations themselves. There are still few days left, and many think a deal will be done, because it has to be done”

Mark Mardell North America editor

The proposal would cut food stamps, benefits for federal workers and some social services programmes.

Mr Obama had sought tax rises for the wealthy, but was pushing for a lower threshold of $400,000.
He also offered a change to the way Social Security cost of living adjustments are made for some recipients, cuts from government healthcare programmes and a two-year extension of the debt ceiling.
Mr Boehner's office called the proposal "a step in the right direction" but not fully "balanced".
Analysts have painted a grim picture of the consequences of going over the cliff, with some warning that the impact could push the US back into recession.
The Organization for Economic Co-operation and Development (OECD) said in its latest economic outlook that the recession from the cliff could become global.

Posted in: World news