US House Minority Leader Nancy Pelosi speaks to the media
on the "fiscal cliff" on Capitol Hill in Washington.
Efforts to avoid the looming US "fiscal cliff" were
thrown into disarray on Friday with finger-pointing lawmakers
fleeing Washington for Christmas vacations even as the year-end
deadline for action edged ever closer.
No new negotiations were scheduled between Republicans,
congressional Democrats and the White House to reach a deal
to prevent a fiscal calamity in 10 days.
"How we get there, God only knows," House of Representatives
Speaker John Boehner, the top Republican in Congress, told
reporters on Friday when asked about a possible comprehensive
"fiscal cliff" solution. Boehner's own "Plan B" option
collapsed in a dramatic heap on Thursday night when he failed
to rally the support of his fellow House Republicans.
If there is no agreement, taxes would go up on all Americans
and hundreds of billions of dollars in automatic government
spending cuts would kick in next month - actions that could
plunge the U.S. economy back into recession.
In the eye of the storm was Boehner, who reluctantly agreed
to a demand by President Barack Obama that taxes go up on the
wealthiest Americans, only to find he could not bring along
anti-tax conservatives in his own party.
After protracted negotiations, Boehner had extracted a
compromise from Obama to raise taxes on those Americans
making more than $400,000 a year, instead of the president's
preference of those with income of $250,000 a year.
But with talks stalled on the level of spending cuts to which
Obama would agree, Boehner attempted a backup plan to raise
taxes only on those making more than $1 million a year -
amounting to just 0.18 percent of Americans.
That failed because conservative House Republicans refused to
support tax increases on anyone. Now Boehner's leadership is
in question as both parties engaged in a round of blaming as
they began closing down business until after the Christmas
holiday next week.
Obama and his fellow Democrats in Congress are insisting that
the wealthiest Americans pay more in taxes in order to help
reduce high federal budget deficits and avoid deep spending
cuts. Republicans control the House and Democrats control the
It was not clear whether Obama would go ahead with plans to
spend Christmas in Hawaii with his family or stay in
Washington to try to breathe some life back into the talks.
Stocks dropped sharply on fears that the United States could
go fall back into recession if politicians do not prevent it.
Major indexes lost more than 1 percent, though investors
still held out hope that an agreement will be brokered in
"I think if you get into mid-January and (the talks) keep
going like this, you get worried, but I don't think we're
going to get there," said Mark Lehmann, president of JMP
Securities, in San Francisco.
Boehner, at a Capitol Hill news conference, said the ultimate
fault lies with Obama for refusing to agree to more spending
reductions that would bring down America's $1 trillion annual
deficit and rising $16 trillion debt.
"What the president has proposed so far simply won't do
anything to solve our spending problem. He wants more
spending and more tax hikes that will hurt our economy,"
Democrats responded with incredulity.
"I like John Boehner, but gee whiz," said an incredulous
Senate Majority Leader Harry Reid, the top Democrat in
Congress. He decried what he called the "brinkmanship and
silliness" in the House.
House members, heading to their home states for the holidays,
were instructed to be available on 48 hours notice if
"They went from Plan B to plan see-you-later," Obama adviser
David Axelrod said on MSNBC on Friday morning.
The crumbling of Boehner's plan highlights his struggle to
lead some House Republicans who flatly reject any deal that
would increase taxes on anyone.
Republican Representative Tim Huelskamp criticized Boehner's
handling of the negotiations, saying the speaker had "caved"
to Obama opening the door to tax hikes. Huelskamp, a
dissident first-term congressman, said he was not willing to
compromise on taxes even if they are coupled with cuts to
government spending sought by conservatives.
Fiscal conservatives "are so frustrated that the leader in
the House right now, the speaker, has been talking about tax
increases. That's all he's been talking about," Huelskamp
said on MSNBC on Friday morning.
Democrats are now stepping up efforts to gather some
Republican votes for a Democratic bill passed by the Senate
months ago that would extend the expiring tax cuts to all but
the wealthiest Americans.
"What we'll have to do is figure out where that line is that
gives us those 218 votes" needed to garner a majority of the
House behind legislation, Republican Representative Michael
Burgess said on CNBC on Friday.
Senate Republican Leader Mitch McConnell, who has experience
helping to forge deals when House Republicans are in
disarray, is likely to play a larger role now in attempting
to rescue the situation along with other Senate Republicans,
who have been more receptive to compromising.
Sean West, a Eurasia Group analyst, told Reuters: "Boehner
didn't have a ton of good moves, and has even fewer now." He
said he thought Boehner was "either headed back to the White
House for a big deal or he's accepting whatever bipartisan
fallback is crafted by Senate leaders. Hard to see him coming
back with another partisan gambit."