The failure of Congress' deficit-reduction supercommittee adds a new dimension to the 2012 political contests, drawing political battle lines around broad tax increases and massive spending cuts that now are scheduled to begin automatically in 2013.
President Barack Obama and his Republican challenger will be forced to debate alternatives for reducing deficits, made all the more urgent by the looming consequences of congressional inaction. The dividing lines already are sharply drawn, with Obama supporting deficit reduction that includes a mix of spending cuts and tax increases on the wealthy, while Republicans have declared themselves averse to tax hikes.
An election that has been shaping up as a referendum on Obama's stewardship of the economy now will require the candidates to offer competing forward-looking deficit-reduction plans to avoid cuts and tax hikes that neither side wants to see materialize.
For Obama, that is a more favorable place to be, drawing contrasts with his opponent and arguing for higher taxes on the rich rather than defending his oversight of an economy that could still be suffering from high unemployment and slow growth next November.
Beginning in 2013, the federal government faces two oncoming trains. When the supercommittee was unable to find agreement by Wednesday, it triggered spending cuts of $1.2 trillion starting in January 2013 and extending over 10 years. Half of the cuts would come from defense spending, the other from education, agriculture and environmental programs, and, to a lesser extent, Medicare.
At the same time, tax cuts adopted during the presidency of George W. Bush will expire at the end of 2012, meaning an increase for every taxpayer.
Defense Secretary Leon Panetta has said the cuts would "tear a seam in the nation's defense."
Meanwhile, the tax increases would hit a still-fragile economy, endangering a recovery and raising prospects of another recession.
But while neither side wants those outcomes, Washington's recent history of tackling fiscal problems shows Congress does not act unless faced with a dire deadline. It extended Bush-era tax cuts in 2010 just days before they expired, it avoided a government shutdown by hours and it put off a debt crisis this summer in the face of a government default.
"The next big event, barring some movement from Congress, may just well be the 2012 election," said Kevin Madden, a former senior House leadership aide and an outside adviser to Republican Mitt Romney's presidential campaign. "Then we look to either a new president and a new Congress, or the same president and the same Congress to restart it all."
Election years do not lend themselves to big legislative initiatives. Lawmakers are too busy seeking re-election to take potentially controversial stances that could cost them votes. Moreover, congressional leaders may well want to see how the elections affect Washington's balance of power before undertaking changes that require compromises.
An angry public could demand swift action. But even if Congress were to attempt to find common ground next year, the legislative maneuvering would unfold in the midst of the presidential contest, and White House aides acknowledge that it can't avoid becoming a part of the political debate.
They repeatedly point out that each of the eight Republican candidates have refused to endorse any deficit-reduction plan that contains any tax increases and that they reiterated that position en masse during a recent presidential debate.
"The very men and woman who would occupy the Oval Office stood up on a stage and all raised their hand and said they would not accept a deal that had as its foundation $10 in spending cuts for every $1 in revenue," White House spokesman Jay Carney said this week.
While Republicans have criticized Obama for not engaging directly in the supercommittee negotiations, his hands-off approach was calculated, coming in the aftermath of his own failed attempts to strike a deficit deal with House Speaker John Boehner, R-Ohio. In a gridlocked Congress, Obama is more likely to lose if he gets deeply involved.
The detachment allows him to set a clear dividing line for voters, one in which he can cast Republicans as protecting the rich. It's a stance that for now has political appeal. A number of recent public opinion polls show that up to two-thirds of Americans support raising taxes on individuals earning more than $1 million, and about half favor raising taxes on families earning at least $250,000 a year.
Even if some Republicans were disposed to negotiate a new deficit-reduction plan, Obama's sharpening of the lines between the parties could drive them away.
"If the president has decided that he is now in full campaign mode, that's going to make things very difficult in terms of finding common ground," said David Winston, a GOP strategist who advises House Republican leaders.
Eager to maintain pressure on Congress, Obama this week issued a veto threat against any efforts to change the automatic spending cuts triggered by the supercommittee's inaction.
Aides said Obama did not prefer those cuts, but he made it clear that the threat of such cuts was essential to get Congress to act.
"There will be no easy off-ramps on this one," Obama said Monday. "We need to keep the pressure up to compromise, not turn off the pressure. The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion."
Republicans pounced on the veto threat, portraying Obama as indifferent to deep Pentagon reductions.
Republican presidential candidate Rick Perry, the governor of Texas, said he found the veto threat "reprehensible." He added: "If Leon Panetta is an honorable man, he should resign in protest."
But Democrats, and Obama in particular, don't feel as vulnerable on defense as the party once was. Aides point to foreign policy advances, the killing of Osama bin Laden and other al-Qaida leaders, and the drawdown of forces from Iraq and Afghanistan as evidence that Obama has credibility on military issues.
But Carney this week also said that if critics worry about maintaining defense spending levels, "There is an easy way out here, which is be willing to ask the wealthiest Americans to pay a little bit more in order to achieve this comprehensive and balanced deficit-reduction plan."