Boehner withdraws plan to avoid fiscal cliff

Republican House of Representatives leader, speaker John Boehner came in for a stinging rebuke from Republican lawmakers yesterday, after they failed to back a bid to extract concessions from president Barack Obama in year-end "fiscal cliff" talks.

In the US, the term fiscal cliff has been recently coined to refer to the effects on the economy that could arise as a result of tax increases, spending cuts and a corresponding reduction in the US budget deficit beginning in 2013 if existing laws are not changed by 31 December 2012, when the Bush-era tax cuts end and planned spending cuts under the Budget Control Act of 2011 to rein in the deficit come into force.

The dramatic twist sent into disarray attempts to head off $600 billion worth of tax hikes and spending cuts that would end up pushing the economy into recession next year.

It also raised questions over Boehner's future as speaker after his failure to control section of conservatives in his caucus.

With the automatic tax hikes and spending cuts only 11 days away and politicians still bickering, stock futures were down sharply on the news of the rebuke to Boehner.

The Ohio congressman's efforts were aimed at demonstrating Republican unity by passing a bill through the House, known as "Plan B," that would limit income-tax increases to the most wealthy Americans, those earning $1 million and more, a far smaller number of taxpayers than those earning $250,000 Obama wants to bring in the wider tax net.