Legislators heading a special US government deficit-reduction "super-committee"say that the panel has failed to reach a deal to rein in deficits, adding to world fears about Europe's debt crisis.
"We are deeply disappointed that we have been unable to come to a bipartisan deficit reduction agreement," Patty Murray, a Democratic senator, and Jeb Hensarling, a Republican representative, said in a joint statement on Monday.
The announcement confirmed widespread expectations that the 12-member panel would fail in its mission to cut US deficits by $1.2tn over 10 years amid partisan feuds over tax increases for the rich and cuts to social spending.
Al Jazeera's Kimberly Halkett, reporting from Washington, DC, said, the failure to reach an agreement triggered automatic defence cuts as well as cuts to certain entitlement programmes.
"Already, members of Congress are fighting to see that those cuts do not take place. There is a little bit of wiggle room there, in that those cuts are not triggered to go into effect until 2013. The bottom line is that it's a political blame game now and nobody wants to be seen as the reason for this failure," our correspondent said.
Under the August law that created the committee, the deadlock calls for draconian automatic cuts to domestic programmes and the military from January 2013, though legislators still have time to repeal those cutbacks.
"There's still too many Republicans in congress who have refused to listen to the voice of reason and compromise"
- Barack Obama, US president
"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve," said Murray and Hensarling.
"We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy," they said.
Barack Obama, the US president, said he would veto any effort to get rid of automatic spending cuts that would take effect in 2013 if Congress cannot find other ways of trimming government deficits.
"There's still too many Republicans in Congress who have refused to listen to the voice of reason and compromise," Obama said as legislators announced that efforts by the "super-committee" to reach a deal had failed.
"A lot of finger-pointing [is] going to President Obama who has been largely silent in much of this," according to our correspondent.
"Many people feel that the reason for his silence has been because there was a foreshadowing that this would be a failure. This is now set to become a major election issue in the [upcoming] US election.
"The loser in all of this is the American people, who, once again, see their Congress failing to deliver on their promises."
US elections take place in November 2012 with Obama and many members of Congress running for re-election in a vote likely to be dominated by economic issues.
Source: Al Jazeera and agencies