In a surprise development late Thursday night, House Speaker John Boehner pulled his so-called "Plan B option" -- an extension of current tax rates for Americans making up to $1 million a year -- from the House floor, admitting that it did not have the support necessary to pass and leaving a resolution to the fiscal cliff in question.
"The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with [Democratic Senate Majority Leader Harry] Reid on legislation to avert the fiscal cliff," Boehner, R-Ohio, wrote in a statement. "The House has already passed legislation to stop all of the Jan. 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation's crippling debt. The Senate must now act."
Immediately after the announcement that "plan B" had failed, Dow Jones Industrial futures traded down, with other stock indicators also signaling sharp losses and volatility for Friday morning's opening -- though stock futures generally are lightly traded in the evening. Indicators soon bounced off the initial lows but still signaled a rough start to the final trading session of the week.
In Washington, all legislative business has concluded for the week. House Majority Leader Eric Cantor's office said that members could still return "after the Christmas holiday when needed" if a breakthrough is eventually reached.
The outlook for a deal to avert the "fiscal cliff" by Christmas has reached a new low, with no clear path forward, though lawmakers and the White House maintained hope this week for a deficit-reduction compromise by the end of the year.
A senior aide to the speaker confirmed late Thursday evening that Boehner and Obama still have not spoken since Monday evening, when the speaker told the president that he would move ahead with his backup plan, although staff-level talks have continued behind the scenes.
"Speaker Boehner tried to play hardball by asking his members to vote for a tax increase. He learned the hard way that you must find a bipartisan solution," one senior House Democratic leadership aide said reacting to the developments. "Walking away has considerably weakened him and put the country literally on the precipice of the cliff."
Republicans had sought to act to avoid an income tax hike on 99 percent of Americans in 2013, and leverage new pressure on President Obama in the ongoing talks for a broader "cliff" deal.
Obama has threatened to veto the legislation, calling it counterproductive and the cuts burdensome for the middle class, and Reid, D-Nev., has promised not to bring it up for consideration in the Senate.
"'Plan B' ... is a multi-day exercise in futility at a time when we do not have the luxury of exercises in futility," said White House spokesman Jay Carney Thursday.
Democrats complained that the posturing on "plan B" distracted the focus from a broader bargain on taxes, spending, entitlement reforms and other measures that had begun coming into focus earlier this week.
Reid said the Senate would break for the Christmas holiday but return to Washington one week from Thursday. President Obama will not join his family in Hawaii on Friday as planned if the "cliff" is not resolved, an administration official said.
"If you look at Speaker Boehner's proposal and you look at my proposal, they're actually pretty close," Obama said Wednesday, appealing for a big "fair deal."
"It is a deal that can get done," he said. "But it cannot be done if every side wants 100 percent. And part of what voters were looking for is some compromise up here."
The latest offers exchanged by Obama and Boehner are roughly $450 billion apart, largely differing on where to draw the line for an income tax hike at the end of the year.
Obama wants to see rates rise on incomes above $400,000 a year, a concession from his earlier insistence on a $250,000 threshold. Boehner, who had opposed any tax rate increase, now says he could agree to a rate hike on earners of $1 million or more.
Both sides also disagree about the size of spending cuts and changes to entitlement programs.
Obama's plan would trim spending by $800 billion over a decade with half coming from Medicare and Medicaid. He has also agreed to limits on future cost-of-living increases for Social Security beneficiaries, something anathema to many Democrats.
But Boehner has said the cuts are insufficient. He seeks $1 trillion or more in spending reductions, citing entitlement programs as the primary drivers of U.S. deficits and debt.
"For weeks the White House said that if I moved on [tax] rates that they would make substantial concessions on spending cuts and entitlement reforms. I did my part. They've done nothing," Boehner said today.
"The real issue here, as we all know, is spending," he said. "I don't think that the White House has gotten serious about the big spending problem that our country faces.
ABC News' Sandy Cannold contributed to this report.