February 6, 2013 in Nation/World

Short-term budget fix urged

Cuts would imperil economy, Obama says
Anita Kumar And David Lightman McClatchy-Tribune
 
Associated Press photo

President Barack Obama asked Congress on Tuesday to come up with spending cuts and tax revenue to put off the automatic cuts that are scheduled to kick in March 1.
(Full-size photo)

Deficit to drop below $1 trillion

WASHINGTON – The federal budget deficit will drop below $1 trillion for the first time in President Barack Obama’s tenure in office, a new report said Tuesday.

The Congressional Budget Office analysis said the government will run a $845 billion deficit this year, a modest improvement compared to last year’s $1.1 trillion shortfall but still enough red ink to require the government to borrow 24 cents of every dollar it spends.

The report predicted the deficit would dip to $430 billion by 2015, the lowest since the government posted a $459 billion deficit is former President George W. Bush’s last year in office. That would be a relatively low 2.4 percent when measured against the size of the economy.

Associated Press

WASHINGTON – President Barack Obama urged Congress on Tuesday to pass a package of modest cuts and tax changes as a way to delay drastic, across-the-board federal spending reductions that could harm the economy.

Obama’s proposal would only postpone the $85 billion in automatic cuts, scheduled to take effect March 1, by a few months until a larger deal could be reached.

“Deep, indiscriminate cuts to things like education and training, energy and national security will cost us jobs, and it will slow down our recovery,” Obama said in a seven-minute statement to reporters at the White House. “It’s not the right thing to do for the economy. It’s not the right thing for folks who are out there still looking for work.”

Obama did not offer a specific proposal or release any new plans Tuesday. But he said Congress should approve additional revenue by eliminating tax loopholes and deductions benefiting certain industries or the wealthy, as well as spending reductions.

He also said Congress should rely on a proposal he made in mid-December to House Speaker John Boehner, R-Ohio, which includes, among other changes, a less-generous measure of inflation to Social Security and other programs and cuts to health care.

On Capitol Hill on Tuesday, Republicans began criticizing Obama’s comments even before he uttered them, dismissing them as more partisan rhetoric and the same mix of tax increases and defense cuts he advocated in the past. Senate Minority Leader Mitch McConnell, R-Ky., said the president had an “unserious attitude.”

“We must be clear. This approach is neither responsible nor balanced,” said a joint statement by House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif., and Sen. James Inhofe of Oklahoma, the top Republican on the Senate Armed Services Committee.

The automatic cuts – known inside the Beltway as sequestration – are the result of a bipartisan deal struck in 2011 to raise the nation’s debt ceiling. Congress agreed that if a 12-member committee failed to reduce the deficit by $1.2 trillion over the next decade, the cuts would come from government spending.

The first round of $109 billion in cuts was set to start in January. But the White House and Congress agreed to delay that until March 1 as part of a deal that raised taxes on the richest 1 percent of Americans. The bill, passed by the Senate and the House of Representatives on New Year’s Day, also lowered the cuts to $85 billion.

The reductions, nearly 10 percent of the nation’s defense and domestic spending, would be felt immediately in a wide range of government programs: fewer FBI agents, less food assistance for low-income families and a delay in new equipment and repairs for the military. The cuts could lead to the loss of hundreds of thousands of jobs.

In recent weeks, some Republican lawmakers suggested that the government should consider allowing the original cuts to go forward.

“We’re willing to let it go through till they (Democrats) respond to us,” said Rep. Lynn Westmoreland, R-Ga.

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