The failure of a special deficit-reduction supercommittee sets up a year-end battle between President Barack Obama and a dysfunctional Congress over renewing a payroll tax cut and jobless benefits for millions.
The failure of the debt panel also means deep, automatic cuts to the Pentagon budget, beginning in 2013, that defense hawks already are vowing to unwind.
Stock prices plummeted Monday as the panel ended its brief, secretive existence without an agreement on how to cut $1.2 trillion or more from the deficit over 10 years. The supercommittee's failure was not unexpected and grew out of intractable divisions over spending and taxes that promise to hound lawmakers through 2012 elections that could sort it all out.
Republicans and Democrats alike pointed fingers, maneuvering for political advantage.