House Republicans oppose that plan, saying it would have them shirk their responsibility for managing federal budgets. Under the scenario, the House GOP would get to add as much as $1 trillion in spending cuts to the proposal — a sweetener, but still not as much as the GOP wants.
Friday's announcement came after the financial markets had closed for the week. Markets have fluctuated all week as Congress and the White House struggled to find agreement. Financial ratings agencies have warned of adverse consequences for the government's credit rating if Treasury officials default on federal obligations, which is expected if the debt ceiling is not raised by Aug. 2 and which could send shock waves across the economy.
Around the Capitol, Republicans said they would move to the next stage of the crisis. "It's disappointing that the talks with the White House did not reach a favorable conclusion," said McConnell. "It's time now for the debate to move out of a room in the White House and onto the House and Senate floors, where we can debate the best approach to reducing the nation's unsustainable debt."
Democrats harshly criticized Boehner's withdrawal.
"Speaker Boehner's adult moment is long overdue," said Rep. Nancy Pelosi (D-San Francisco). "Our economy, our children's education, our seniors' security and our nation's fiscal soundness require that we act without further delay."
Peter Nicholas and Kathleen Hennessey in the Washington bureau contributed to this report.