Speaker says he is not concerned for his job but pressure rises after Republican right rejects tax rises to solve budget crisis
The Republican speaker of the House of Representatives, John Boehner, has signalled that he is not planning to quit after a congressional debacle that left negotiations over US debt and spending in chaos and brought closer the prospect of the country falling over the "fiscal cliff" on 1 January.
With house members having left Washington on Thursday night for Christmas and senators scheduled to leave Friday afternoon, the prospect of a deal before the deadline appeared bleak.
Boehner, speaking at a press conference on Friday morning regarding how a deal could be found, summed up the mood in Washington. "How we get there? God only knows," he said.
The Republican leader in the Senate, Mitch McConnell, to whom Boehner shifted responsibility for finding a deal, made an opening bid, suggesting the Senate take up a bill that has already passed the House that would extend for another year the present tax breaks for everyone that were introduced during the presidency of George W Bush. The proposal will not fly for the Democrats, but at least it is the start of a process.
Until now, McConnell has shown little interest in becoming involved in the negotiations. McConnell proposed the House bill as a starting point to which the Democrats could introduce amendments and differences between the House and Senate versions be hammered out.
"It's called legislating, folks," McConnell said. "It's what Congress used to do."
News of the breakdown of talks triggered a sell off on the US stock markets on Friday, with the Dow Industrial Average falling by more than 160 points before noon.
Jack Ablin, chief investment officer at BMO Private Bank, said more sell-offs would come until a deal was done. "Everyday that there isn't an agreement will be a drag on the economy," he said.
The swift change in mood contrasts with earlier this week, when President Barack Obama and Boehner had been closing in on a deal that would have raised taxes and cut spending. But Democrats and Republicans now appear further away from a deal than they did a month ago, after a stunning reversal in congress on Thursday night.
Boehner's credibility and authority as speaker are on the line, after he failed to push through a Republican bill aimed offering a short-term fix. He had to withdraw it when he was confronted by a revolt from mainly Tea Party-backed Republicans, who were unwilling to countenance any tax rise.
Although he denied on Friday he was washing his hands of the whole issue and said that he would continue talking to Obama, Boehner effectively abandoned the talks process by saying it was not up to the Senate and the White House, rather than the House of Representatives, to come up with a solution.
Sean West, a policy analyst at Eurasia Group, a political risk consultancy, said the breakdown meant the US was "in a different world than it was earlier this week".
"This is the end of the second act," he said. "Boehner has far less options than he did and it certainly increases the risk that a deal won't be done. That said we still believe the likelihood is that a solution will be found."
This is the latest in a number of showdowns between the White House and Congress during Obama's presidency. What stunned Washington on Thursday night was that the failure of Boehner's "Plan B" represented a dramatic break from the familiar pattern of political to-ing and fro-ing that eventually ends in a deal. It showed that if Boehner cannot control his own members, the chances of him securing a deal seem slim.
Boehner faces an election for speaker early in January, when the new congress convenes. What should have been a relatively straightforward vote now looks one that could be risky for him. He could face a challenge from the Tea Party wing of the Republican party, with Eric Cantor, the majority leader in the house, waiting in the wings to take over.
Asked at the press conference if he was concerned about his job, Boehner said: "No, I'm not. Listen, you've all heard me say this and I've told my colleagues the same thing. If you do the right things every day for the right reasons, the right things happen."
Boehner insisted that the revolt had not been aimed at undermining him, but instead reflected concern among some Republicans about going against their principles and voting for a perceived tax rise.
"There a was a perception created that that vote last night was going increase taxes," he said. "Now I disagreed with that characterisation of the bill, but that impression was out there. We had a number of our members who just did not want to be perceived as having raised taxes. That was the real issue."
What made the debate such a humiliation for Boehner was that it was a purely Republican one. The so-called Plan B bill would have limited tax rises in January just to those earning £1m or more a year. Democrats were opposed, wanting the rises to kick in at $250,000 or even, as Obama proposed, $400,000.
Cantor, who led a revolt against Boehner in the summer of 2011, during another showdown with the White House over the federal debt ceiling, was onside this time and faced humiliation of his own when he had confidently predicted that the Republicans had the numbers to get the bill through. Boehner further tied him in by bringing him along to the press conference on Friday.
Another potential loser in the debacle was the Republican congressman Paul Ryan, Mitt Romney's presidential running-mate, whose backing for the bill will have cost him right-wing support.
One of Obama's main advisers, David Axelrod, interviewed on MSNBC, said: "The fact that they couldn't even pass that ['Plan B']was an embarrassment."
He added: "Hopefully over the weekend the speaker, the leadership will think that through and come back and be ready to negotiate seriously and move forward."