Published March 02, 2013
WASHINGTON – President Obama signed an order authorizing the government to begin cutting $85 billion from federal accounts, officially enacting across-the-board spending reductions.
Obama acted Friday, the deadline for the president and Congress to avoid the steep, one-year cuts.
The president placed blame squarely on Republican lawmakers at a Friday press conference for failing to stop automatic spending cuts that were to begin kicking in later in the day, calling the cuts "dumb, arbitrary."
Republicans, for their part, said the fault was his, for insisting that increased taxes be part of the resolution
The president said the impact of the cuts won't immediately be felt, but middle class families will begin to "have their lives disrupted in significant ways." He said that as long as the cuts stay in effect, Americans will know that the economy could have been better had they been averted.
"The pain, though, will be real," Obama said.
He said he still believed the cuts could be replaced but he wanted a deal that includes more tax revenue.
"Let's be clear: None of this is necessary," Obama told reporters at the White House. "It's happening because of a choice that Republicans in Congress have made. We shouldn't be making a series of dumb, arbitrary cuts to things."
Obama met for less than an hour Friday morning with House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Republican leader Mitch McConnell and House Democratic leader Nancy Pelosi.
Boehner's office said he and McConnell told Obama they're willing to close tax loopholes but only to lower taxes overall, not to replace spending cuts. Obama and congressional leaders have agreed that Congress should pass a bill funding the government beyond the end of March while they keep working on a way to replace the spending cuts, Boehner's office said.
"The president got his tax hikes on January 1st," Boehner said bluntly after the meeting with Obama. "The discussion about revenue in my view is over. It's about taking on the spending problem here in Washington."
On Thursday, two proposals aimed at blunting the blame over the cuts -- one Democratic and the other Republican -- were rejected in the Senate.
McConnell has already drawn a line in the stand and said in a statement released before Friday's meeting that Republicans will not support any last-minute deals and they will not raise taxes.
"Republicans have offered the President numerous solutions, including the flexibility he needs to secure those reductions more intelligently," McConnell said in the statement. "I am happy to discuss other ideas to keep our commitment to reducing Washington spending at today's meeting. But there will be no last-minute, back-room deal and absolutely no agreement to increase taxes."
In addition to McConnell, the President meet with House Speaker John Boehner, Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi. Vice President Biden will also be at the meeting.
In the days leading up to the deadline, there were few signs that either party had much progress on how to cut the federal debt that now tops $16.5 trillion.
As the White House has come to acknowledge, the impact of the cuts will – for the most part -- not be felt immediately.
The billions of dollars in budget cuts are most likely going to phase in over the next few months. Furloughs of government workers will begin several weeks from now. Administration officials say the impact of this and other cuts will build up over time; Obama describes the effect on the economy as a “tumble downward.”
But some fiscal hawks see a silver lining, in that the sequester will force the government to trim the waste in order to shield higher-priority items. Already, the White House budget office is recommending agencies take a skeptical eye toward costly conferences and training programs.
The two sides remain deadlocked over the issue of raising taxes. Republicans want to replace the current regime of cuts with different, more sensible, cuts. Democrats want to blend in a set of tax increases, closing loopholes for top earners and some corporations.
The effects of the 2013 sequestration will be rolled out over the next several months. It won’t be a government shutdown but it will be a government slowdown.
“The impact of this policy won’t be felt overnight but it will be real,” Obama said. “The longer these cuts are in place, the greater the damage.”
The predicted impact of the spending cuts could come in flight delays, limited hours at national parks, longer wait times at border crossings and furloughs of civilian Pentagon employees – and workers at several other agencies.
Some officials say the administration has the leeway, or should be given the leeway, to spread around the budget pain.
“There is so much hype on this, it’s ridiculous,” David Walker, former U.S. comptroller general, told Fox News. “We spend as much money as the next 15 countries put together and some of the people who are hyping this big time are going to be really embarrassed.”
How the public reacts to the cuts will have an effect on how Congress addresses the issue. If voters react with a shrug, the GOP may be less compelled to agree to the kinds of tax increases Obama wants. If there’s a big backlash, the Obama administration may take it as vindication that the public won’t stand for big cuts to federally funded programs. Still, Republicans point out that the sequester idea originated at the White House.
“The sky is not going to fall but things will get progressively worse,” Maryland Democrat Rep. Chris Van Hollen said.
White House spokesman Jay Carney said Friday’s talks are designed to be a “constructive discussion” about how to keep the deep spending cuts from having harmful consequences.
The meeting, the first face-to-face since Obama was sworn in for his second term in January, will essentially look past the current $85 billion in cuts to the next looming fiscal crisis – a possible government shutdown.
On March 27, the fiscal 2013 continuing appropriations resolution expires, cutting off the ability of most agencies and programs to operate. A new spending bill will be needed to keep the government from shutting down.
Following March Madness – budget style – Congress will have two months to decide on the debt limit. Congress has suspended enforcement of the $16.4 trillion limit on federal borrowing until May 18. The short-term debt limit deal will then raise the borrowing limit the following day, on May 19, to the debt accumulated up through May 18. The short-term extension, approved in January, will allow what budget experts project will be $450 billion in additional borrowing before the debt limit is raised to a new, higher level.
And then, even if no increase in granted by May 19, the Treasury Department will be able to stave off a final day of reckoning until late July or early August by redeploying cash management measures which would allow it to claw back about $220 billion worth of borrowing capacity.
The Associated Press contributed to this report.