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Obama urges stopgap budget deal to avoid deep cuts

Published on NewsOK Modified: February 5, 2013 at 4:49 pm •  Published: February 5, 2013
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The White House insists, however, that any short-term deficit-trimming package or any long-term debt stabilization plan must consist of both spending cuts and new tax revenue. Republicans have said they will oppose tax increases.

The automatic spending cuts, known as a "sequester" in budget language, were supposed to kick in Jan. 1, but Obama and Congress identified $24 billion in deficit reduction during a New Year's agreement, thus averting the cuts until March 1.

Though that date is more than three weeks away, the White House showed some urgency in making its request Tuesday. Several Republican lawmakers had begun to signal that they might be willing to let the automatic cuts kick in as the only viable means of achieving deficit reduction, even though the reductions would cut into programs they support, such as military spending. Moreover, the White House feared the mere threat of the cuts was disruptive as government agencies began to prepare layoff notices.

"There's no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn't come together to eliminate a few special-interest tax loopholes or government programs that we agree need some reform," Obama said.

In his remarks, Obama also said a debt proposal he made in December to House Speaker John Boehner was still on the table. That plan would increase revenue by about $600 billion over 10 years and reduce spending by about $800 billion, including savings of about $400 billion in health care programs such as Medicare. It would also change an inflation formula that would reduce cost-of-living adjustments for beneficiaries of government programs, including Social Security, and would also add spending, including $50 billion for public works projects.

Obama won about $600 billion in higher taxes at the start of the year, and congressional Republicans say they are not about to approve more tax revenue. While the Senate has a Democratic majority, the House is controlled by Republicans.

"We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," Boehner said in a statement. "The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years."

Senate Majority Leader Harry Reid, D-Nev., has said that a deficit reduction package could include revenue from closing tax loopholes. He has specifically mentioned ending tax breaks for corporate jets and breaks for the oil and gas industry. Such measures, however, would result in only modest amounts of revenue. The oil and gas subsidies total about $4 billion a year; the subsidies for purchasers of corporate jets are about $300 million a year.

Business groups have been pressing for a tax overhaul that eliminates some loopholes and tax breaks, but they have also called for lower corporate tax rates.

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Associated Press writer Stephen Ohlemacher contributed to this article.

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