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Across-the-board budget cuts are set to slice federal spending

March 01, 2013|By Kathleen Hennessey and Michael A. Memoli

WASHINGTON -- Across-the-board budget cuts were set to begin hitting federal agencies at midnight Friday after last-minute efforts by President Obama and congressional leaders failed to produce a compromise to forestall $85 billion in automatic reductions that all sides said they wanted to avoid.

Obama warned that the economy would be weaker, job growth slower and middle-class families harmed by the cuts, although he predicted the impact would roll out over time and would not immediately rattle the economy.

"This is not going to be an apocalypse,” Obama told reporters at the White House on Friday. “It's just dumb. And it's going to hurt. It's going to hurt individual people, and it's going to hurt the economy overall.”

Weeks of back-and-forth did not produce a budget deal to avert the cuts, and neither did a morning meeting between Obama and congressional leaders in the Oval Office.

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House Speaker John A. Boehner (R-Ohio) emerged from the session saying he would not agree to the president’s demand that the cuts be replaced with a deficit reduction deal that includes new taxes on those earning higher incomes.

“The discussion about revenue, in my view, is over,” Boehner said. “It's about taking on the spending problem in Washington.”

The billions of dollars in cuts that go into effect on Saturday will probably be phased in over weeks and months. Agencies from the Pentagon to the Department of Education have begun making plans to notify employees who will have to take unpaid days off.

Administration officials say the cuts in staffing will affect air-traffic control,  border security, preventive health screenings, prosecution of criminal cases and more. The automatic cuts were harsh by design, meant to force Republicans and Democrats into a bigger budget deal that reduces deficit spending.

Still, some fiscal hawks see an up side to the sequester, which they believe will force the government to cut waste and make choices about which items are worth protecting. Some members of Congress would like to yield more power to Obama to make the choices on where to cut.

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Dire warnings about the cuts led some to suggest Obama was hyping them to put more pressure on Republicans. Even before meeting with Obama on Friday, Senate Minority Leader Mitch McConnell (R-Ky.) ruled out any “last-minute, back-room deal” to replace the spending reductions with an alternative plan and insisted there would be “absolutely no agreement to increase taxes.”

After the meeting, Boehner raised yet another looming budget fight -- the expiration of the government funding resolution on March 27.

The Republican-led House, Boehner said, will move a continuing budget resolution through the chamber next week, giving Senate Democrats a chance to either pass the plan or send back an alternative to avoid a full-blown government shutdown.

“I'm hopeful that we won't have to deal with the threat of a government shutdown while we're dealing with the sequester at the same time,” he said. “The House will act next week, and I hope the Senate will follow suit."

That funding plan would essentially ensure the cuts, known as the sequester, continue through the end of the fiscal year, locking in routine government operations at the new, lower levels, while restructuring the cuts to defense, military construction and veterans accounts.

The administration prefers serious talks about a long-term budget solution that balances higher taxes for the wealthy with cuts in spending, and possibly even entitlement reform.

On Friday, Obama’s warnings turned into predictions.

He called the budget cuts “dumb” and “arbitrary,” and blamed Republicans in Congress for not agreeing on a plan to replace the cuts in part with revenue raised by closing tax breaks for wealthy taxpayers and corporations.

“It’s unnecessary at a time when too many Americans are looking for work,” Obama said after the meeting. “It’s inexcusable.”

“The longer these cuts remain in place,” Obama said, “the greater the damage to our economy -- a slow grind that will intensify with each passing day.”

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kathleen.hennessey@latimes.com

Twitter: @khennessey

michael.memoli@latimes.com

Twitter: @mikememoli

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