US House of Representatives puts off 'fiscal cliff' vote

That complicates attempts to avoid the year-end fiscal cliff, the package of automatic spending cuts and tax increases that threatens to send the US economy back into recession.

In a brief statement, House of Refresentatives speaker John Boehner said the Bill “did not have sufficient support from our members to pass”.

At the same time he challenged Mr Obama and Senate majority leader Harry Reid to work on legislation to avert the crisis.

Emerging from a hurriedly-called evening meeting of House Republicans, congressman Steve LaTourette said Mr Boehner had told politicians: “He’s going to call the president and he’s going to go down and talk to him and maybe they can hammer something out.”

Even if Mr Boehner’s so-called Plan B legislation – drafted unilaterally by Republicans – had passed the House, the White House had threatened a veto and Senate Democrats had made plain they would sidetrack the Bill the moment it arrived from the House.

Yet officials in both parties suggested the House vote would have cleared the way for a final stab at negotiations.

The fiscal cliff has dominated the post-election session of Congress that now seems certain to extend well beyond Christmas.

More broadly, it marks the end of a tumultuous two-year period in which dozens of conservative Republicans roared into the House demanding lower taxes, yet now find themselves two years later called on by their own leadership to raise rates on upper incomes.

Ironically, the votes were set in motion earlier in the week, after Mr Boehner and Mr Obama had significantly narrowed their differences on a compromise to avoid the fiscal cliff.

Republican officials said that members of the party’s leadership had balked at the terms that were emerging. Democrats said Mr Boehner’s abrupt decision to shift to his Plan B reflected a calculation that he lacked support from his own rank and file to win the votes needed for the type of agreement he was negotiating with the president.

Mr Boehner, chastened by Mr Obama’s re-election, has broken a quarter-century of Republican dogma by offering to raise income tax rates on earnings exceeding one million dollars a year.

Mr Obama, eager for a budget deal that would let him move on to other issues, in turn, would cut the growth of Social Security pensions, an issue usually off-limits to Democrats.

By offering to impose tax increases on those with incomes over $400,000, he has retreated from what he campaigned on – the 200,000 income ceiling on individuals and 250,000 on couples.

That means both men have angered politicians and staunch supporters of their respective parties, just when the need to retain that backing is crucial.

Mr Boehner’s Plan B vote, meant to rally the Republican troops, called for preventing tax rises for anyone earning less than one million dollars a year. And it blocked cuts to the defence budget, a Republican red line, by cutting social programmes cherished by Democrats, such as food vouchers and the landmark health care law that Mr Obama signed earlier in his term.

“When you walk into a room and represent a group and you have to give ground to get a deal, you have to stay in that room as long as you can and you have to walk out with blood on your brow,” said Joseph Minarik, research director for the Committee for Economic Development and a veteran of gruelling budget talks as a former Clinton White House and House Democratic aide.

“Otherwise, the people outside the room don’t believe you’ve fought hard for them.”

Asked at a news conference a few hours before the scheduled vote, Mr Boehner hinted broadly that no matter what became of the legislation, it would not be the end of the attempt to keep the economy from reaching the fiscal cliff.

“I expect that we’ll continue to work together,” he said.

Mr Obama made it clear on Wednesday that he, too, was prepared for further negotiations and officials in both parties in the Senate predicted that might happen quickly after the votes in the House.

Mr Obama wants to raise taxes by about 20 billion dollars a year more than Mr Boehner.

That is real money by most measures, yet such numbers are barely noticeable compared with the $2.6 trillion the government is projected to collect next year and the $3.6 trillion it is expected to spend.

Despite their differences, the numbers being proposed by Mr Obama and Mr Boehner are so close and the political risks both men have taken on taxes and Social Security benefits so stark, that many consider it almost unthinkable that they would not eventually complete a deal.

“Having come out of their trenches, they either have to shake hands or get shot, maybe by their own troops,” said Robert Bixby, executive director of the non-partisan Concord Coalition, an anti-deficit group.