Debt panel’s demise sets up partisan wrangling

By The Associated Press
Posted: 3:11 am Wed, November 23, 2011

WASHINGTON — 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.

At the same time, the debt panel’s failure triggers deep, automatic cuts to the Pentagon budget, beginning in 2013, that defense hawks already are dedicated to unwinding. Domestic programs would bear cuts as well.

And the panel’s failure puts taxes and out-of-control deficits front and center in next year’s presidential and congressional campaigns. The election’s outcome is likely to determine whether Bush-era tax cuts that expire in December 2012 will be fully renewed or whether Obama can force Republicans to make concessions on taxes.

Obama supports renewing most of the Bush tax cuts but wants to allow tax rates for wealthier earners to go up.