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Obama, congressional leaders: No deal on sequester

3:34 PM, Mar 1, 2013   |    comments
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by David Jackson, USA TODAY

WASHINGTON -- Preparing to leap into the fiscal unknown, President Obama and congressional Republicans failed to reach a deal Friday to avert the $85 billion in automatic, across-the-board budget cuts set to begin at midnight.

"These cuts will hurt our economy, they will cost us jobs," Obama told reporters after meeting 52 minutes with congressional leaders on the impact of the massive cuts known as the sequester.

Obama attributed the "dumb,.arbitrary cuts" to Republican refusal to agree to a new debt reduction plan that includes higher taxes on wealthy Americans through the closing of loopholes and deductions.

House Speaker John Boehner, R-Ohio, said after the meeting that Obama got tax hikes in the January agreement to end the last budget impasse, the so-called fiscal cliff.

"The discussion about revenue in my view is over," Boehner said. "It's about cutting the spending in Washington."

The parties did appear to make progress on avoiding another potential budget standoff down the road -- the March 27 expiration of the continuing resolution that is funding the government; failing to renew it would lead to a budget shutdown.

In a post-meeting statement, Boehner said Congress is planning to extend the continuing resolution "to prevent a government shutdown while we continue to work on a solution to replace the president's sequester."

The president also sounded upbeat about avoiding a shutdown, saying he would sign an extension provided Congress sticks to budget targets it has used in the past.

As for the sequester, Obama said debt reduction should include both spending cuts and higher taxes in the wealthy, calling it a "balanced plan" that can end the cuts that will slow the economy, cost people jobs and possibly undermine national defense.

The president is expected to sign a formal sequestration order later Friday.

While the sequester will hurt the economy, Obama predicted that the American people will come through it and sustain economic recovery, even though "Washington sure isn't making it easy." The president also urged affected Americans to pressure Republicans into reaching an agreement to end a sequester, asking them to appeal to "a caucus of common sense" in Congress.

"This is not going to be a apocalypse, I think, as some people have said," Obama said at one point. "It's just dumb. And it's going to hurt."

The Senate's top Republican, Mitch McConnell of Kentucky, called the meeting "an opportunity to restate our commitment to the American people that we would significantly reduce Washington spending."

While pledging to try and avoid a government shutdown at the end of March, McConnell said Republicans would work on "solutions for making spending reductions more intelligently than the President's across-the-board cuts."

He added: "I will not be part of any back-room deal and I will absolutely not agree to increase taxes."

Both McConnell and Boehner attended the Oval Office meeting with Obama and Vice President Biden. So did the top congressional Democrats, Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif.


The meeting took place on deadline day for the sequester, $85 billion in automatic domestic and defense cuts that Democrats and Republicans say will hurt the economy and undermine national security. The automatic, across-the-board sequester cuts become official at midnight.

The talks reflected little if any progress on the issue that has divided them in this and previous budget disputes -- the best way to cut a federal debt that now tops $16.5 trillion.

Obama has called for debt reduction that includes both budget cuts and increased tax revenue by eliminating loopholes and deductions that benefit the wealthy.

Boehner said Obama and Senate Democrats "are demanding more tax hikes to fuel more stimulus spending."

The White House meeting also took place a day after Senate Republicans and Democrats blocked each other's competing sequester plans.

The sequester originated as part of a 2011 agreement to break yet another Obama-Republican budget impasse, raising the debt ceiling.

The idea: Require a series of automatic cuts, split between defense and domestic programs, so onerous that the parties would be forced to come up with a plan to cut more than $1 trillion off the debt in 10 years.

While the parties have some progress, there has been no major debt reduction deal.

Barring a very unusual turn of events, Obama will be required by the law to issue a sequestration order by 11:59 p.m.Friday.

The order will specify reductions in various budgets in amounts calculated by the Office of Management and Budget, which would also transmit a report on the cuts to Congress.

How the sequester might play out after Friday, both economically and politically, remains uncertain.

Obama said many Americans may not feel the effects for months, but others face problems ranging from job furloughs to a loss of Head Start services for their children.

Predicting "a slow grind that will intensify with each passing day," Obama said the effects will be felt throughout the government, including the Pentagon, Border Patrol, FBI, and social service agencies.

"I don't anticipate a huge financial crisis," Obama said, "but people are going to be hurt."

So will Washington's reputation, he added.

"You know, this is not a win for anybody," Obama said. "This is a loss for the American people."

Copyright 2013 USATODAY.com

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