House Speaker John Boehner scrapped a plan to allow higher tax rates on annual income above $1 million, yielding to anti-tax resistance within his own party and throwing already-stalled budget talks deeper into turmoil.
He will hold a news conference today at 10 a.m. Washington time, his office said in a statement.
Boehner said last night that President Barack Obama and Senate Majority Leader Harry Reid should come up with legislation to avoid more than $600 billion in tax-and-spending changes that would probably cause a recession in the first half of 2013 if left in place. Until Dec. 17, Obama and Boehner had been edging closer to a deal that would have included $1 trillion each in tax increases and spending cuts.
Now that Boehner has pulled his plan, House members and senators won’t vote on the end-of-year budget issues until after Christmas, giving them less than a week to reach agreement to avert tax increases and spending cuts set to take effect in January. The partisan divide hardened yesterday, making the path to a deal more uncertain.
“The odds go up that we go over the fiscal cliff,” said Representative Rob Bishop of Utah, a Republican.
Standard & Poor’s 500 Index futures dropped 1.3 percent at 8:24 a.m. New York time, after falling as much as 3.4 percent in Asian trading. U.S. Treasuries rose, sending the 10-year yield down three basis points to 1.76 percent.
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