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G.O.P. Leaders in House Pull Tax Bill, Citing Lack of Votes Boehner Cancels Tax Vote in Face of G.O.P.
(about 3 hours later)
WASHINGTON – House Republican leaders abruptly pulled their fallback tax bill from the floor Thursday night, conceding that they did not have the votes to pass it. WASHINGTON — Speaker John A. Boehner’s effort to pass fallback legislation to avert a fiscal crisis in less than two weeks collapsed Thursday night in an embarrassing defeat after conservative Republicans refused to support legislation that would allow taxes to rise on the most affluent households in the country.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Speaker John A. Boehner said in a statement. “Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff.” House Republican leaders abruptly canceled a vote on the bill after they failed to rally enough votes for passage in an emergency meeting about 8 p.m. Within minutes, dejected Republicans filed out of the basement meeting room and declared there would be no votes to avert the “fiscal cliff” until after Christmas. With his “Plan B” all but dead, the speaker was left with the choice to find a new Republican way forward or to try to get a broad deficit reduction deal with President Obama that could win passage with Republican and Democratic votes.
The decision was a major setback for the speaker, who was pushing his so-called Plan B to prevent lower tax rates from expiring on most Americans. It came after the House had narrowly approved a plan to suspend planned Pentagon cuts. What he could not do was blame Democrats for failing to take up legislation he could not even get through his own membership in the House.
With just days to go before more than a half trillion dollars in tax increases and spending cuts kick in, a chasm separates congressional Republicans from President Obama, even though the latest deficit offers from the president and the speaker are numerically very close. “The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Mr. Boehner said in a statement that said responsibility for a solution now fell to the White House and Senator Harry Reid, Democrat of Nevada, the majority leader. “Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff.”
The struggle to win Republican support for a measure that would allow income taxes to rise on a sliver of the top one percent of taxpayers telegraphed a grave decision for the speaker. A deal with the president would almost certainly lose a huge swath of his Republican conference, but it could pass with Democratic support. Does he make that deal and risk a Republican revolt, or do leaders allow the nation to careen off the so-called fiscal cliff? The stunning turn of events in the House left the status of negotiations to head off a combination of automatic tax increases and significant federal spending cuts in disarray with little time before the start of the new year.
The 13 Republican “no” votes on the procedural motion included members who have long been a thorn in the speaker’s side, including three members his leadership recently threw off their committees: Representatives Justin Amash of Michigan, Tim Huelskamp of Kansas and Walter Jones of North Carolina. But they also included influential conservatives like Representative Jim Jordan of Ohio, who heads the conservative Republican Study Committee, and backbenchers like Representative Trent Franks of Arizona, not known as trouble for the leadership. At the White House, the press secretary, Jay Carney, said the defeat should press Mr. Boehner back into talks with Mr. Obama.
Jay Carney, the White House press secretary, accused the speaker of failing to keep his Republican troops in line behind his budget offers, the latest of which promised $1 trillion in new revenues over 10 years. “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,” he said.
What happens next will determine whether Washington can avert a fiscal crisis in the first days of the new year. The refusal of a band of House Republicans to allow income tax rates to rise on incomes over $1 million came after Mr. Obama scored a decisive re-election victory campaigning for higher taxes on incomes over $250,000. Since the November election, the president’s approval ratings have risen, and opinion polls have shown a strong majority not only favoring his tax position, but saying they will blame Republicans for a failure to reach a deficit deal.
Democrats — and many Republicans — hope a vote on the Boehner backup plan will usher in a last and final round of negotiations between the speaker and President Obama over a broad deficit reduction deal that raises more than $1 trillion in taxes over ten years while locking in another $1 trillion in savings from entitlements like Medicare and other federal programs. Representative Eric Cantor, the majority leader, pointedly said he will not send House members home for the holidays after Thursday night’s vote. With a series of votes on Thursday, the speaker, who faces election for his post in the new Congress next month, had hoped to assemble a Republican path away from the cliff. With a show of Republican unity, he also sought to strengthen his own hand in negotiations with Mr. Obama. The House did narrowly pass legislation to cancel automatic, across-the-board military cuts set to begin next month, and shift them to domestic programs.
“It’s always darkest before the dawn,” said Senator Charles E. Schumer of New York, the third-ranking Democrat. “A grand bargain is more likely than not before the end of the year.” But the main component of “Plan B,” a bill to extend expiring Bush-era tax cuts for everyone with incomes under $1 million, could not win enough Republican support to overcome united Democratic opposition. Democrats questioned Mr. Boehner’s ability to deliver any agreement.
But other lawmakers fear that most House Republicans will see passage of legislation that extends Bush-era tax cuts for household incomes below $1 million as their final offer. House Republican leadership aides made clear that if the bill passes, the speaker believes the next move will have to come from Senate Democrats and the president. Senate Democrats could simply take up and pass the House bill or amend it more to their liking and send it back to the House. “I think this demonstrates that Speaker Boehner has a real challenge,” said Representative Steny H. Hoyer of Maryland, the No. 2 House Democrat. “He hasn’t been able to cut any deal, make any agreement that’s balanced. Even if it’s his own compromise.”
“The House is going to pass a bill that protects more than 99 percent of Americans from a tax hike Democrats want to slap them with in two weeks,” Senator Mitch McConnell of Kentucky, the Senate Republican leader, said Thursday. “The president is determined to leap off the cliff. Well, we’re not going to let him take the middle class with him.” Representative Rick Larsen of Washington accused Republicans of shirking their responsibility by leaving the capital. “The Republicans just picked up their toys and went home,” he said.
But Democrats say the measure raises taxes on a minute portion of the wealthiest Americans, while increasing taxes more broadly on the middle class. That is because the bill permanently repeals measures that limit deductions and credits for affluent households, at a cost to the Treasury of $163 billion over 10 years. But it allows tax breaks for the middle class, passed as part of the 2009 stimulus law, to expire. Those include an expanded tax credit for college tuition and refunds for the working poor. Futures contracts on indexes of United States stock listings and shares in Asia fell sharply after Mr. Boehner conceded that his bill lacked the votes to pass.
Senate Democratic leaders said Mr. Boehner should put to a vote a Senate-passed bill that would allow tax rates to expire on incomes over $250,000 while extending a variety of middle-class tax cuts not included in the House bill. The point of the Boehner effort was to secure passage of a Republican plan, then demand that the president and the Senate to take up that measure and pass it, putting off the major fights until early next year when Republicans would conceivably have more leverage because of the need to increase the federal debt limit. It would also allow Republicans to claim it was Democrats who had caused taxes to rise after the first of the year had no agreement been reached.
“Until Republicans take up our bill, there’s nothing to discuss,” Mr. Reid said. “It’s time for Republicans to get serious.” That strategy lay in tatters after the Republican implosion.“Some people don’t know how to take yea for an answer,” said Representative Charlie Dent of Pennsylvania, a Republican who supported the measure and was open about his disappointment with his colleagues.
The House was to vote Thursday on two bills to deal with the pending fiscal crisis. The first mirrors legislation the House passed in May to cut $310 billion from the deficit over the next decade — much of it from programs for the poor — and shift some of that savings to the Pentagon to stave off automatic military spending cuts scheduled for next year. Opponents said they were not about to bend their uncompromising principles on taxes just because Mr. Boehner asked.
That was hastily added to the House calendar on Wednesday to alleviate anger from conservatives that the House would vote on legislation effectively raising taxes on millionaires while not cutting a penny in spending, and from military hawks worried that “Plan B” does not avert $50 billion in across-the-board defense cuts. “The speaker should be meeting with us to get our views on things rather than just presenting his,” said Representative Justin Amash of Michigan, who recently lost a committee post for routinely crossing the leadership.
The second bill, totaling $3.9 trillion in tax-cut extensions over 10 years, would preserve Bush-era income, capital gains and dividend tax cuts permanently to all household incomes up to $1 million. At that level, income tax rates would rise from to 39.6 percent from 35 percent and dividend and capital gains taxes would rise to 20 percent from 15 percent. The current estate tax level – 35 percent on the value of estates above $5 million for individuals, $10 million for couples – would be extended permanently. Just days before more than a half trillion dollars in tax increases and spending cuts kick in, a chasm now separates Congressional Republicans from the president, even though the latest deficit offers from the White House and speaker are numerically very close. With his own plan defeated, Mr. Boehner faces a grave decision. A deal with Mr. Obama would almost certainly lose a huge swath of his Republican conference, but it could pass with Democratic support. Does he make such a deal and risk a Republican revolt, or do leaders allow the nation to head into an economic situation that some say could cause a recession?
The bill also permanently stops the alternative minimum tax — a parallel income tax system designed to set a floor for taxes paid by the rich — from expanding to hit more of the middle class. And it permanently expands the amount of investments small businesses can write off their taxes. “It has been deeply troubling that Speaker Boehner has spent day after day on the road to nowhere; making it clear Republicans are having trouble governing and only putting us closer to the fiscal cliff,” said Representative Sander M. Levin of Michigan, the senior Democrat on the House Ways and Means Committee. “The speaker needs to now exercise leadership and go back to the negotiating table with the president to find a path forward that is balanced, equitable, and promotes economic growth.”
Senator Rob Portman, Republican of Ohio, was enlisted to press his former House colleagues to vote yes, but even with the failure of that effort, he said there was a way forward.
“Maybe I’m the last optimist standing in this town, but I still think whether it passes or not, there’s still an opportunity for a broader agreement,” he said.
The speaker’s troubles on Thursday seemed to worsen with each hour. The vote to cancel the military cuts, supposed to be the easiest of the night, passed narrowly, 215-209. Even a routine procedural vote to take up the speaker’s tax bill passed by a surprisingly tight tally, 219-197, with 13 Republicans bolting from their leadership to vote “no.” Recalcitrant conservatives were balking on allowing taxes to rise on incomes over $1 million a year.
“I want something that treats everybody fairly. I think everybody needs to be protected, and I don’t think the bill does that,” said Representative Mick Mulvaney, Republican of South Carolina, who opposes Plan B.
The struggle to muster the votes for Plan B played out against a surreal tableau in the Capitol. Senator Daniel K. Inouye, Democrat of Hawaii, who died Monday, was lying in state in the Rotunda. Mr. Boehner spoke briefly with Senator Reid as they watched the somber memorial service for Mr. Inouye in the morning. Then the two men blasted each other hours later. Representative Kevin McCarthy of California, the Republican whip, could be seen bending arms on the House floor.
Stymied, Republican leaders called a recess around 7 p.m. Members streamed in and out of the whip’s office, munched on Chick-fil-A sandwiches (regular and spicy) and professed uncertainty over what comes next.
Democrats — and some Republicans — hoped the demise of the Boehner backup plan will usher in a last and final round of negotiations between the speaker and President Obama over a broad deficit reduction deal that raises more than $1 trillion in taxes over 10 years while locking in another $1 trillion in savings from entitlements like Medicare and other federal programs.
“The math changes” with a bipartisan deal, said Representative Steven C. LaTourette, a retiring Republican moderate from Ohio, who predicted Mr. Boehner could win at least half of House Republicans. “If there’s a negotiated settlement with the president, the speaker will put it on the floor and we’ll see where the chips fall.”

Jeremy W. Peters contributed reporting.