* "God only knows" way forward, House Speaker Boehner says
* Stocks weak as "fiscal cliff" talks stall
* Big tax hikes, automatic spending cuts loom in January
* Lawmakers leaving Washington for Christmas
By David Lawder and Mark Felsenthal
WASHINGTON, Dec 21 Efforts to avoid the looming
U.S. "fiscal cliff" were thrown into disarray on Friday with
finger-pointing lawmakers fleeing Washington for Christmas
vacations even as the year-end deadline for action edged ever
No new negotiations were scheduled between Republicans,
congressional Democrats and the White House to reach a deal to
prevent a fiscal calamity in 10 days. The White House said
President Barack Obama will make a statement at 5 p.m. EST (2200
GMT) on Friday on the "fiscal cliff" stand-off.
"How we get there, God only knows," House of Representatives
Speaker John Boehner, the top Republican in Congress, told
reporters on Friday when asked about a possible comprehensive
"fiscal cliff" solution.
Boehner's own "Plan B" option dramatically collapsed in a
heap on Thursday night when he failed to rally the support of
his fellow House Republicans.
If there is no agreement, taxes would go up on all Americans
and hundreds of billions of dollars in automatic government
spending cuts would kick in next month - actions that could
plunge the U.S. economy back into recession.
In the eye of the storm was Boehner, who reluctantly agreed
to a demand by Obama that taxes go up on the wealthiest
Americans, only to find he could not bring along anti-tax
conservatives in his own party.
After protracted negotiations, Boehner had extracted a
compromise from Obama to raise taxes on those Americans making
more than $400,000 a year, instead of the president's preference
of those with income of $250,000 a year.
But with talks stalled on the level of spending cuts to
which Obama would agree, Boehner attempted a backup plan to
raise taxes only on those making more than $1 million a year -
amounting to just 0.18 percent of Americans.
That failed because conservative House Republicans refused
to support tax increases on anyone. Now Boehner's leadership is
in question as both parties engaged in a round of blaming as
they began closing down business until after the Christmas
holiday next week.
It emerged on Friday that Boehner's defeat in the House was
worse than first thought. A key Republican lawmaker said Boehner
scrapped the vote when he realized that between 40 and 50 of the
241 Republicans in the House would not back him.
Obama and his fellow Democrats in Congress are insisting
that the wealthiest Americans pay more in taxes in order to help
reduce federal budget deficits and avoid deep spending cuts.
Republicans control the House and Democrats control the Senate.
It was not clear whether Obama would go ahead with plans to
spend Christmas in Hawaii with his family or stay in Washington
to try to breathe some life back into the talks.
Stocks dropped sharply on fears that the United States could
go fall back into recession if politicians do not prevent it.
Major indexes lost about 1 percent, though investors still
held out hope that an agreement will be brokered in Washington.
"I think if you get into mid-January and (the talks) keep
going like this, you get worried, but I don't think we're going
to get there," said Mark Lehmann, president of JMP Securities,
in San Francisco.
Boehner, joined by his No. 2, Eric Cantor, at a Capitol Hill
news conference, said the ultimate fault rests with Obama for
refusing to agree to more spending reductions that would bring
down America's $1 trillion annual deficit and rising $16
"What the president has proposed so far simply won't do
anything to solve our spending problem. He wants more spending
and more tax hikes that will hurt our economy," Boehner said.
Democrats responded with incredulity.
"I like John Boehner, but gee whiz," said an incredulous
Senate Majority Leader Harry Reid, the top Democrat in Congress.
He decried what he called the "brinkmanship and silliness" in
House members, heading to their home states for the
holidays, were instructed to be available on 48 hours notice if
"They went from 'Plan B' to 'plan see-you-later,'" Obama
adviser David Axelrod said on MSNBC on Friday morning.
The crumbling of Boehner's plan highlights his struggle to
lead some House Republicans who flatly reject any deal that
would increase taxes on anyone.
Boehner's bill was pulled after his team concluded that they
were "40 to 50" votes short of the 217 needed in the chamber for
passage, said Representative Tom Cole, who helps the House
Republican leadership round up votes.
"If we were within four or five votes," Cole said, he and
other Republican leaders along with Boehner would have kept
trying to rally support. "But there was too much distance
between where we were at and what we needed."
Republican Representative Tim Huelskamp criticized Boehner's
handling of the negotiations, saying the speaker had "caved" to
Obama opening the door to tax hikes. Huelskamp, a dissident
first-term congressman, said he was not willing to compromise on
taxes even if they are coupled with cuts to government spending
sought by conservatives.
Fiscal conservatives "are so frustrated that the leader in
the House right now, the speaker, has been talking about tax
increases. That's all he's been talking about," Huelskamp said
on MSNBC on Friday morning.
Democrats are now stepping up efforts to gather some
Republican votes for a Democratic bill passed by the Senate
months ago that would extend the expiring tax cuts to all but
the wealthiest Americans.
"What we'll have to do is figure out where that line is that
gives us those 218 votes" needed to garner a majority of the
House behind legislation, Republican Representative Michael
Burgess said on CNBC on Friday.
Senate Republican Leader Mitch McConnell, who has experience
helping to forge deals when House Republicans are in disarray,
is likely to play a larger role now in attempting to rescue the
situation along with other Senate Republicans, who have been
more receptive to compromising.
Sean West, a Eurasia Group analyst, told Reuters: "Boehner
didn't have a ton of good moves, and has even fewer now." He
said he thought Boehner was "either headed back to the White
House for a big deal or he's accepting whatever bipartisan
fallback is crafted by Senate leaders. Hard to see him coming
back with another partisan gambit."