Obama presses Congress for deal to end spending cuts

Government agencies will now begin to hack a total of $85 b from their budgets between Saturday and October 1

Just hours after across-the-board spending cuts officially took effect, President Barack Obama pressed Congress today to work with him on a compromise to halt a fiscal crisis he said was starting to “inflict pain” on communities across the US.

Obama and a bipartisan group of Congressional leaders failed yesterday to avoid the deep spending reductions known as the “sequester”, which automatically kicked in overnight in the latest sign of dysfunction in a divided Washington.

If left in place without legislative remedy, government agencies would have to hack a total of $85 billion from their budgets between Saturday and October 1, cuts that over time could cause economic harm, slash jobs and curb military readiness.

“These cuts are not smart,” Obama said in his weekly radio and internet address. “They will hurt our economy and cost us jobs. And Congress can turn them off at any time — as soon as both sides are willing to compromise.”

Obama signed an order on Friday night that started putting the cuts into effect.

At the heart of Washington’s persistent fiscal showdowns is disagreement over how to slash the budget deficit and the $16-trillion national debt, bloated over the years by Iraq and Afghanistan wars and government stimulus for the ailing economy.

The Democratic President wants to close the fiscal gap with spending cuts and tax hikes — what he calls a “balanced approach”. But Republicans do not want to concede again on taxes after doing so in negotiations on the “fiscal cliff” early this year.

“The discussion about revenue, in my view, is over. It’s about taking on the spending problem,” John Boehner, the Republican House of Representatives speaker, said on leaving the talks between Obama and Congressional leaders yesterday.

As Obama and his aides have done for weeks, the president in his radio address offered a litany of hardships he said would flow from the sequester, saying, “severe budget cuts... have already started to inflict pain on communities across the country”.

“Beginning this week, businesses that work with the military will have to lay folks off. Communities near military bases will take a serious blow. Hundreds of thousands of Americans who serve their country — Border Patrol agents, FBI agents, civilians who work for the Defense Department — will see their wages cut and their hours reduced,” he said.

“The longer these cuts remain in place, the greater the damage,” he said. “Economists estimate they could eventually cost us more than 750,000 jobs and slow our economy by over one-half of one per cent.” Despite that, financial markets shrugged off the stalemate yesterday.

No signs of negotiations
While Obama has put the blame for the cuts on Republicans’ intransigence and their determination to protect tax breaks for the wealthy, Republicans insist he is responsible for the fiscal predicament. They also accuse him of exaggerating the expected impact.

Obama appealed for Republicans to work with Democrats on a deal, saying Americans were weary of seeing Washington “careen from one manufactured crisis to another”. But he offered no new ideas to resolve the situation, and there was no immediate sign of any negotiations planned over the weekend.

One reason for the inaction in Washington is that both parties still hope the other will either be blamed by voters for the cuts or cave in before the worst effects predicted by Democrats come into effect.

A Reuters/Ipsos poll released yesterday showed 28 per cent of Americans blamed Congressional Republicans for the sequestration mess, 18 per cent thought Obama was responsible and four per cent blamed Congressional Democrats. Thirty-seven per cent blamed them all, according the online poll.