President Barack Obama talks against automatic spending cuts scheduled to take effect next week. (Larry Downin …
"If Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness. It will eviscerate job-creating investments in education and energy and medical research," Obama warned in a speech at the White House, flanked by emergency workers. “It won’t consider whether we’re cutting some bloated program that has outlived its usefulness or a vital service that Americans depend on every single day.”
Under a 2011 law, the "sequester" will slash about $85 billion starting March 1 unless Congress agrees to a new round of deficit reduction. But with time quickly ticking down, lawmakers do not appear to have a solution in the works. Obama has repeatedly called for a blend of spending cuts chiefly affecting entitlement programs like Medicare and new tax increases achieved by targeting loopholes that chiefly benefit the wealthy and rich industries. Republicans have rejected that approach—while blaming the White House for coming up with the sequester. The across-the-board cuts, which Congress approved, are the price to pay for lawmakers' failure to come up with a compromise to stem the tide of red ink that has flooded the nation's finances.
"These cuts are not smart, they are not fair, they will hurt our economy, they will add hundreds of thousands of Americans to the unemployment rolls," Obama said. "This is not an abstraction. People will lose their jobs."
Obama again urged Congress to pass a short-term budget fix in the absence of a complete budget resolution.
“I am willing to cut more spending that we don’t need, get rid of programs that aren’t working” and pare down entitlement outlays while boosting government revenues by overhauling the tax code, Obama said. That “balanced approach [could] finish the job of deficit reduction.”
But “at a minimum, Congress should pass a smaller package of spending cuts and tax reforms … not to kick the can down the road, but to give them time to work together on a plan that finishes the job of deficit reduction in a sensible way," he said.
Republican House Speaker John Boehner immediately panned the president’s performance.
“Once again, the president offered no credible plan that can pass Congress—only more calls for higher taxes,” Boehner said in a statement.
“We should close loopholes and carve-outs in the tax code, but that revenue should be used to lower rates across the board,” the Republican leader said. “Tax reform is a once-in-a-generation opportunity to boost job creation in America. It should not be squandered to enable more Washington spending. Spending is the problem, spending must be the focus.”
The White House crafted the sequester during the summer 2011 battle over government spending that almost saw the country default on its debt payments for the first time in its history. The idea was to force a “supercommittee” of Democrats and Republicans to do what Congress as a whole had failed to do: find a compromise approach to reducing the government’s deficits and the national debt.
Force them how? By making it the law of the land that failure to find a compromise would automatically trigger utterly unacceptable cuts to domestic programs and defense—enough to reduce spending by $1.2 trillion over 10 years. (This works out to about $500 billion in cuts from each category, which will mean less borrowing, which in turn will mean about $200 billion less in interest payments.) Mandatory programs—Social Security, for instance—are either exempt from sequestration or, as in the case of Medicare, face a relatively modest 2 percent cut.
So is Obama to blame? Not really—or at least, not alone. The Congress, including Republican leaders now loudly denouncing the sequester, passed it, and Obama signed it into law. And it wouldn’t have happened if the supercommittee had found a compromise. Among the major roadblocks: unyielding GOP opposition to raising tax revenue.
Wasn’t it supposed to start in January? As part of a New Year's compromise on the "fiscal cliff," Congress and the president basically gave themselves some breathing room by agreeing to some deficit reduction—enough to push the sequester’s trigger date to March 1.
Republicans working hard to ensure that Obama bears the lion’s share of the blame for the sequester note that the GOP-held House of Representatives twice passed legislation to replace the sequester. But those bills stalled in the Democrat-led Senate and died at the dawn of the new Congress in January. It’s not clear that the House could pass them again, and even if it could there’s no sign the legislation would advance in the Senate.
And Washington has just over one week to find a way out—if it wants one.
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- Budget, Tax & Economy
- President Barack Obama