WASHINGTON (AP) - House Republicans abruptly scrapped a vote Thursday night on legislation allowing tax rates to rise for households earning $1 million or more, complicating attempts to avoid a year-end "fiscal cliff" that threatens to send the economy into recession.
The legislation "did not have sufficient support from our members to pass," Speaker John Boehner conceded in a brief statement. At the same time he challenged President Barack Obama and Senate Majority Leader Harry Reid, D-Nev., to work on legislation to avoid across-the-board tax increases and deep spending cuts due to take effect in less than two weeks.
"The Senate must now act," said the Ohio Republican, who has noted recently that he has taken risks in supporting higher tax revenues during several weeks of fruitless negotiations on the fiscal cliff.
House Speaker John Boehner of Ohio speaks to the media about the “fiscal cliff” at the U.S. Capitol on Thursday.
In a statement released a short while later, the White House said the president's "main priority is to ensure that taxes don't go up on 98 percent of Americans and 97 percent of small businesses in just a few short days. The president will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy."
Still, Obama has threatened to veto the "Plan B" measure if it reaches his desk.
Reid's office sounded a more combative note. "The only way to avoid the cliff altogether is for Speaker Boehner to return to negotiations and work with President Obama and the Senate to forge a bipartisan deal," spokesman Adam Jentleson said.
Earlier, emerging from a hurriedly-called evening meeting of House Republicans, Ohio Rep. Steve LaTourette said Boehner had told lawmakers 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."
One first-termer, Rep. Tim Huelskamp, said the developments were "a victory for Republican principles." The Kansas Republican is one of three lawmakers recently stripped of favored committee assignments for bucking the leadership.
The legislation was crafted to prevent tax increases set to kick in on Jan. 1 on tens of millions of Americans. But another provision that would have let rates rise for those at the upper income range - a violation of long-standing Republican stance against higher taxes that could stifle economic grown - triggered the opposition of anti-tax lawmakers inside the party.
The abrupt turn of events left precious little time for divided government to prevent across-the-board tax increases and deep spending cuts from taking effect with the new year. Economists say the combination threatened a return to recession for an economy that has been recovering slowly from the last one.
The House will not meet again until after Christmas, if then, and the Senate is expected to meet briefly on today, then not reconvene until Thursday.
In his written statement, Boehner said the House has previously passed legislation to prevent all the tax increases from taking effect, and noted that earlier in the evening it had approved a measure to replace across-the-board spending cuts with "responsible" reductions.
Hours earlier, Boehner said Thursday night's legislation - he'd dubbed it Plan B - marked a move to "protect as many American families and small businesses as possible from the tax hikes that are already scheduled to occur" with the new year.
Referring to one of the core themes of Obama's re-election campaign, he said the president has called for legislation to protect 98 percent of the American people from a tax hike. "Well, today we're going to do better than that," he said of the measure that raises total taxes by slightly more than $300 billion over a decade. "Our bill would protect 99.81 percent of the American people from an increase in taxes."
Democrats said that by keeping tax rates unchanged below $1 million - Obama wants the level to be $400,000 - Republicans had turned the bill into a tax break for the wealthy.
They also accused Republicans of crafting their measure to impose a tax increase on 11 million middle class families.
"This is a ploy, not a plan," said Rep. Sander Levin, D-Mich. He accused Republicans of being "deeply cynical," saying the legislation would scale back some education and child tax credits.
Obama made it clear on Wednesday that he is prepared for further negotiations, and numerous officials in both parties in the Senate predicted that might happen quickly after the votes in the House.