The task of picking up the pieces of the “fiscal cliff” talks – and reassuring global financial markets that were shaky early on Friday – is likely to fall largely to President Barack Obama after Republicans abandoned their own proposed fix championed by House of Representatives Speaker John Boehner.
Boehner, the top Republican in Congress and Obama’s chief negotiating partner, failed to muster enough support from his fellow Republicans, who control the House of Representatives, to pass his bill called “Plan B” on Thursday.
He had hoped to use it to pressure Obama in talks to avert the steep tax hikes and automatic government spending cuts slated to start taking effect in just 11 days.
Boehner late on Thursday abruptly pulled the legislation, which would have raised taxes only on people earning $1 million or more a year. House members, heading to their home states for the holidays, were instructed to be available on 48 hours notice if necessary.
With his power apparently weakened, Boehner scheduled a news conference for 10 a.m. Friday. Democrats were urging him to go back to the bargaining table with Obama.
“They went from Plan B to plan see-you-later,” Obama adviser David Axelrod said on MSNBC on Friday morning.
Obama said he still plans to work with Congress and was hopeful for a bipartisan solution, his press secretary said in a statement late on Thursday.
The failure casts fresh uncertainty over talks to avoid across-the-board tax hikes and spending cuts that could push the U.S. economy into recession in 2013.
Global stock markets weakened on Friday and both the euro and gold slipped as the new setback rattled investors’ nerves. Most major stock markets saw widespread selling as investors moved to traditional safe-haven assets.