As a year-end deadline looms, Republicans in the U.S. House of Representatives pushed ahead on Thursday with their own "fiscal cliff" plan that muddles negotiations with the White House to avoid steep tax increases and spending cuts.
The Republican-led House is aiming to vote on Thursday evening on Speaker John Boehner's "Plan B" to raise taxes only on annual incomes of more than $1 million - an effort to put pressure on President Barack Obama to offer more concessions.
"While the White House slow-walks us all to the edge of the fiscal cliff, Republicans are once again taking action to protect American families, our economy, and our national security," Boehner's office said.
Obama has vowed to veto the plan, and the Democratic-controlled Senate will ignore it rather than use it as a base to work out a wider compromise.
Senate Majority Leader Harry Reid called it a "non-starter" that has wasted a week of negotiating time. He said the Senate will return to Washington after Christmas to continue work if needed.
Republicans complain that Obama has not offered enough in spending cuts to rein in the deficit and hope Plan B will force him to offer more. The two sides are also still at odds on taxes. The White House wants taxes to rise on household incomes above $400,000 a year, a concession from Obama's opening proposal for a $250,000 threshold, while Boehner's plan aims at income over $1 million.
TIME RUNNING OUT
The clock is ticking toward a deadline at the end of the year. Harsh tax increases and spending cuts will kick in if talks fall apart, likely pushing the U.S. economy into recession.
U.S. stocks edged slightly lower as investors fretted that a deal on the budget would not come as soon as they had hoped. The market barely reacted to a round of strong data, including on gross domestic product growth and housing, suggesting talks to avert the fiscal cliff remain the primary focus for markets.
"The closer we get to the end of the year without a deal, the more optimism is going to evaporate," said Todd Schoenberger, managing partner at LandColt Capital in New York. "Volatility is going to be extreme until there's a deal, and the probability of being caught on the downside is much greater than being on the upside."
The Dow Jones industrial average was down 1.92 points, or 0.01 percent.
Time was running short, especially with many lawmakers planning to scatter for the Christmas holiday, while others head to Hawaii on Saturday to attend a memorial service for Senator Daniel Inouye, who died on Monday.
The Senate could recess either late Thursday or Friday. If a broad fiscal cliff deal was reached over the weekend, it could return on Monday to pass it. Otherwise, the Senate might be in recess until December 27. The House schedule was unclear.
Often mistrusted by Tea Party members and other fiscal conservatives in his own caucus, Boehner fought to round up support for his two-part plan, with voting possible around 7:45 p.m. EST (0045 GMT on Friday).
"We are going to have the votes to pass both" the tax and spending parts of Plan B, said House Majority Leader Eric Cantor, a Republican.
In an eleventh-hour effort to avoid a potential defeat at the hands of some of his party members, Boehner added separate legislation with spending cuts to convince more conservatives that the tax increase was worth a risky vote.
Those spending cuts aim to scrap the approximately $55 billion in defense program reductions scheduled to begin in January and shift the cuts to other domestic programs.
They include less spending for social safety net benefits such as food stamps and Medicaid healthcare for the poor. They also target some funding for Obama's signature healthcare reform law.
A Boehner defeat would be an embarrassment, which could either force him to offer concessions to Obama or embolden conservative Republicans to take a harder line against the White House.
(Additional reporting by Kim Dixon; Editing by Mohammad Zargham and Vicki Allen)