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Obama calls for short-term fix to imminent spending cuts

Obama calls for short-term fix to imminent spending cuts

POSTED: Tuesday, February 5, 2013 - 2:30pm

UPDATED: Tuesday, February 5, 2013 - 2:34pm

President Barack Obama called Tuesday for a short-term agreement to put off deep cuts to government spending, including the military, set to take effect next month.

Obama made his pitch in a statement to reporters at the White House, urging Congress to pass a measure that would put off imminent spending cuts -- known as sequestration -- that were part of a 2011 debt ceiling deal.

The president made clear that his past proposal during deficit reduction talks that included spending cuts, entitlement reforms and increased revenue remain on the table.

However, with time running out before the sequestration cuts impact government spending and result in job losses and economic slowdown, Congress should act now to pass a temporary fix that will allow time for further negotiations on a broader plan, Obama said.

Before Obama spoke, House Republican leaders slammed him for failing to produce a budget proposal the day before, which they said is a long-standing deadline to do so under federal law.

In the debt ceiling deal that ended a showdown over whether to increase the federal government's borrowing limit to meet its obligations, Congress and the White House agreed to include the automatic spending cuts of sequestration as motivation to pass a comprehensive deficit-reduction plan.

Deep partisan divisions prevented such an agreement from happening in 2012, an election year.

On Tuesday, Obama said he still supported a broader deal and made clear that revenue from tax reform measures previously agreed to by Republicans -- such as eliminating some loopholes that would increase revenue for the government -- should be used to pay down federal deficits.

GOP leaders have indicated that any further deficit reduction should rely entirely on spending cuts and entitlement reforms.

The government has already delayed the impact of sequestration for the first two months of 2013.

Obama said it was unlikely that Congress would reach a deficit reduction deal by March 1 to render the sequestration cuts moot.

"If they can't get a bigger package done by the time the sequester goes into effect, then I believe they should" pass a smaller package for now, he said, adding there was no reason to let congressional inaction threaten thousands of jobs as well as economic growth.

Earlier, House Speaker John Boehner, R-Ohio, reacted to news of Obama's plan by saying it was the president who "first proposed the sequester and insisted it become law."

Reiterating the longstanding position of Republicans in budget negotiations, Boehner called for replacing the sequester plan with spending cuts and what he called reforms -- a reference to changes in popular entitlement programs such as Medicare and Medicaid.

A last-second agreement in the previous Congress that passed in the first days of 2013 raised tax rates on top income earners as part of a limited deficit-reduction package.

That measure followed weeks of tough negotiations involving Obama and Congress in which other steps to increase government revenue, such as eliminating some tax breaks for corporations, were considered but not included in the final deal.

Obama and Democrats now want such revenue-raising steps to be part of a package that would replace the mandated deficit reduction of the sequester cuts.

The nation's deficit topped $1 trillion in 2012, according to the non-partisan Congressional Budget Office.

Federal spending cuts under sequestration total more than $1 trillion over 10 years, half of which would come from the Pentagon.

Military officials have warned that those cuts, on top of steep budget reductions already in the pipeline over the next decade, would be devastating to its operations as well as the civilian economy that depends on defense-related jobs and spending.

Obama's push to avoid the sequester cuts comes a week before he outlines his second-term agenda in the State of the Union address.

Congress, which authorizes federal spending, has failed to pass detailed annual budgets in recent years due to partisan gridlock over spending and debt, as well as electoral politics.

Instead, it has approved a series of extensions of past spending authorizations -- called continuing resolutions -- to keep the government funded.

During his first term, Obama's annual budget proposals prompted immediate opposition from Republicans -- and Democrats at times -- that rendered the early year exercise of outlining his spending priorities largely moot.

The president's plan for temporarily extending the sequester deadline follows a similar move by congressional Republicans last month on raising the nation's debt ceiling. That deal put off further wrangling on the federal borrowing limit until mid-May.

Some analysts warn that Washington's fiscal paralysis harms the nation's fragile economy and could bring another recession.

Short-term approaches like the recent debt-ceiling measure and now Obama's push on the sequester cuts allows more time for negotiations on a possible broader deal that would address all issues at once. 

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