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HindustanTimes Tue,21 Oct 2014

World

Obama warns of risks over budget cut uncertainty
AP
Washington , February 26, 2013
First Published: 07:45 IST(26/2/2013)
Last Updated: 07:46 IST(26/2/2013)

US President Barack Obama on Monday said looming automatic spending cuts are already affecting the economy, while a top administration official warned that US borders would be less secure if billions of dollars are yanked from the budget on Friday.

Despite the urgent rhetoric, there was no indication the White House and congressional Republicans were actively negotiating a deal to avoid the $85 billion in budget cuts ahead of the end of the week deadline.

Congressional leaders have recently indicated their willingness to let the cuts take effect and stay in place for weeks, if not much longer.

"The uncertainty is already having an effect," Obama said. "Companies are preparing layoff notices. Families are preparing to cut back on expenses. The longer these cuts are in place, the bigger the impact will become."

The automatic cuts were designed to be so unattractive and damaging that they would force Congress and the Obama administration to find a better way to address the country's massive deficit.

They were meant to take effect only if a congressional super-committee failed to come up with at least $1 trillion in savings from benefit programs.

Republicans insist reduced spending needs to be the focus of a deal and have rejected the president's demand to include higher taxes as part of a compromise.

They say legislation passed in early January already raises taxes on the wealthiest Americans to generate an estimated $600 billion for the Treasury over a decade.

Obama is now proposing closing tax loopholes that benefit the wealthiest Americans and corporations.

"Mr. President, you got your tax increase," said House Speaker John Boehner, the top Republican in Congress. "It's time to cut spending here in Washington."

The last known conversation between Obama and Republican leaders was last week and there have been no in-person meetings between the parties this year.

The budget-cutting mechanism, known as sequester, could affect everything from commercial flights to classrooms to meat inspections.

Domestic and defense spending alike would be trimmed, leading to furloughs for hundreds of thousands of government workers and contractors.

The White House continued laying out in stark terms what the cuts would mean for government services, dispatching Homeland Security Secretary Janet Napolitano to warn of the implications for critical security functions.

"I don't think we can maintain the same level of security at all places around the country with sequester as without sequester," said Napolitano, adding that the impact would be "'like a rolling ball. It will keep growing."

Napolitano focused in particular on the impact to the border, saying her agency would be forced to furlough 5,000 patrol agents.

She tamped down the notion that budget cuts would make the nation more vulnerable to terrorism, but said the sequester would make it "awfully, awfully tough" to minimize that risk.

Also Monday, Interior Secretary Ken Salazar said visiting hours would be cut at all 398 national parks, just as they prepare for an influx of spring and summer visitors.

Elsewhere in the government, Defense Secretary Leon Panetta has said the cuts would harm the readiness of US fighting forces. Transportation Secretary Ray LaHood said travelers could see delayed flights. And furloughed meat inspectors could leave plants idled.

Obama will seek to build public support for his call to offset the sequester with a combination of targeted cuts and tax revenues Tuesday when he travels to Newport News, Virginia, a community that would be impacted by the defense cuts.

Many of the nation's governors, who are gathered in Washington for their annual meeting, voiced frustration over the impending cuts, saying Washington's inability to strike a deal had created widespread uncertainty in the economy and hampered economic recovery in their states.

"The president needs to show leadership," said Louisiana Gov. Bobby Jindal, a Republican considered a potential 2016 presidential contender, following a meeting with Obama. "The reality is it can be done. This administration has an insatiable appetite for new revenue."

The governors, emerging from a closed-door meeting with Obama Monday, said the president had assured them the administration is pursuing solutions, but offered no assurances that officials would find a way ahead out ahead of the deadline.


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