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US House vote on fiscal cliff 'Plan B' cancelled US cancels vote on Boehner's fiscal cliff 'Plan B'
(about 3 hours later)
US Republicans have cancelled a vote in Congress on tax rises they hoped would help to avert a so-called fiscal cliff. US Republicans have cancelled a tax vote in Congress, less than two weeks before a deadline for budget reform.
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 House speaker John Boehner proposed the bill, which would have raised taxes on high earners. But right-leaning Republicans rejected it.
Republican leaders have said the Senate must now act, as the House of Representatives adjourns for Christmas. Analysts say the rejection has weakened Mr Boehner's position in negotiations with the White House.
A deal must be reached by 1 January, or a combination of steep tax rises and sharp spending cuts will take effect. Politicians need to agree fiscal rules by 1 January, or steep tax rises and deep 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. Analysts say the so-called fiscal cliff could take the US into recession.
Veto threatVeto 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. Mr Boehner said he had unable to garner sufficient votes to secure passage of the bill.
Even a bill that was presented to Republicans in the House of Representatives as a $3.9 trillion tax cut could not persuade enough of them to back it. Why? Because it also proposed raising taxes on people earning more than $1m. For the class of 2010 in particular, talk of raising any taxes amounts to heresy.
House Speaker John Boehner hoped Republicans would swallow his so-called Plan B, a move that would strengthen his negotiating hand with the White House. Instead, they have snubbed him in a clear blow to his leadership.
If Mr Boehner wants to get a deal that pulls America back from the fiscal precipice he's going to have to do a bipartisan deal that pulls in Democrat support too. The cliff edge just got closer.
Although it would have ensured a tax cut for 99.8% of Americans, it would have imposed a rise on those earning more than $1m (£600,000).
He said in a statement that the bill "did not have sufficient support from our members to pass".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. Shortly after, the White House said President Barack Obama would work with Congress.
The White House pledged to work with Congress, adding it was "hopeful that we will be able to find a bipartisan solution quickly". The White House statement said 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. Earlier on Thursday, the House narrowly passed 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 House is controlled by the Republicans, but the Senate is Democrat-led.
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. Mr Boehner's plan would have had little chance of passing a Senate vote.
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. Analysts say it was in effect an effort to tell the US public that the Republicans should not be blamed if a deal could not be reached.
But some believe that the White House has now been strengthened by Mr Boehner's failure.
'Exercise in futility''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. White House spokesman Jay Carney earlier said Mr Boehner's plan was a "multi-day exercise in futility at a time when we do not have the luxury of exercises in futility".
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.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.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.
The proposal would cut food stamps, benefits for federal workers and some social services programmes.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.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.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".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.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.The Organization for Economic Co-operation and Development (OECD) said in its latest economic outlook that the recession from the cliff could become global.
Are you affected by the fiscal cliff? Please send us your comments using the form below.Are you affected by the fiscal cliff? Please send us your comments using the form below.