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Obama urges compromises over spending cuts

Meetings planned after US Congress officially misses deadline for averting cuts to defence and other programmes.
Last Modified: 27 Feb 2013 17:35
Obama promised during last year's campaign that Washington would be a different place in his second term [Reuters]

US President Barack Obama will meet congressional leaders to discuss what to do about $85bn in spending cuts, the White House has said.

The discussion on Friday, the same day that the cuts take effect, will be the first face-to-face meeting between Obama and Republican leaders this year.

The meeting will come after a divided Congress officially missed the deadline for averting the cuts to defence and other programs, which had been designed to be so ugly that Washington would be forced to avoid them.

Before the White House announcement on Wednesday, there had appeared to be no talks under way to find a better way to tackle the country's $11.7tn debt.

Some opposition Republicans had seemed ready to let the cuts take effect and let attention turn to an even more worrying fiscal deadline at the end of March - a possible government shutdown.

Obama promised as he ran for re-election last year that Washington would be a different place in his second term.

Fragile economy

Mitch McConnell, Senate Republican leader, said Friday's meeting was a chance to address ways to reduce government spending.

He said Americans would not accept more taxes as part of a deal to avert the cuts.

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Experts believe the stand-off is already slowing the fragile economy's recovery from the recession. And government agencies, faced with cuts that mean taking out the same rough percentage whether or not certain budgets are already streamlined, continued to warn what would happen.

Americans appear exhausted by the march of fiscal crises. Three out of 4 say they are not following the spending cuts issue very closely, according to a Pew Research Center poll released this week.

Efforts to close the budget gap have been hurt by Republicans' refusal to accept new tax increases and Democrats' insistence that any spending cuts be matched by tax increases.

The spending cuts would carve $85bn from the US budget through the end of the fiscal year at the end of September, and $1.2tn over the next decade.

Economists agree that policymakers should delay the deep cuts until the economy has strengthened, but they say lawmakers should come up with a realistic long-term plan to fix the debt as soon as possible.

The country's deficits have exceeded $1tn the past four years.

Republican ground

Obama said on Tuesday that the government-wide cuts could hurt military readiness and called the move a "self-inflicted wound that doesn't have to happen."

But some opposition Republicans see the battle as their best opportunity to stand their ground and exact deep spending cuts from Obama - even if it means taking money from the Defence Department, a step Republican politicians have traditionally opposed.

Leading Republicans support a plan that will not place the cuts but would give Obama's agency heads, such as the incoming defence secretary, Chuck Hagel, greater discretion in distributing the cuts.

The idea is that money could be transferred from lower-priority accounts.

But Obama rejected the idea, saying there's no smart way to cut such a large chunk from the budget over just seven months.

The White House is also keenly aware that it would give Republicans an opening to blame Obama, instead of themselves, for every unpopular cut he makes.

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Source:
Agencies
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