House Speaker John Boehner’s Plan B faced such a rebellion in the Republican ranks, the Speaker pulled the vote scheduled for the afternoon.
Mr. Boehner then unexpectedly suspended the House until after Christmas, increasing the uncertainty of reaching a compromise before the fiscal cliff comes into force on January 1.
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Financial markets that until now have been relatively stable may become rattled as a result. Asian markets fell on the news and American futures slipped 200 points.
A Friday sell-off would be reminiscent of the 2008 selloff that occurred after George Bush’s initial bailout plan was shut down by the House in September of 2008.
This puts the onus on the President to take the next step. But the White House said it would continue to pursue a deal with Congress, ideally one that would extend tax breaks for those making less than $250,000 a year.
The Senate is expected to be in session through Friday, then recess until December 27. More serious negotiations are expected to take place behind closed doors in the White House as well as on Capitol Hill.
It appears a deal will be much more difficult to achieve at this point. Boehner was already facing pressure from party conservatives on other concessions he had made in earlier talks.
The rejection is a personal embarrassment after Boehner had worked so hard to rally support for the plan. Some see the rejection as a huge setback for the entire party.
The failure of Plan B illuminates the separation within the party
between conservatives who are adamantly against raising taxes and those who view the election results as a mandate to work with the President.