Obama, Congress leaders to meet as budget cuts hit
By AP - WASHINGTON
28th February 2013 09:05 AM
President Barack Obama and Republican leaders will meet face-to-face for the first time this year Friday, the same day that $85 billion in automatic spending cuts are set to kick in. The talks are so last-minute that any breakthrough on averting the painful measures is virtually impossible.
That essentially puts the White House and Congress in the position of looking past the cuts to the next looming fiscal crisis: a possible government shutdown.
In Washington's stormy partisan atmosphere, the cumbersome annual ritual of passing agency spending bills collapsed entirely last year, and Congress must act by March 27 to prevent the partial shutdown. That scenario carries more risk than the across-the-board cuts that are scheduled to take effect Friday but whose impact would not be immediate.
Both topics are sure to come up at the White House meeting Friday between Obama and top congressional leaders, including Republican House Speaker John Boehner.
White House spokesman Jay Carney said Friday's talks are designed to be a "constructive discussion" about how to keep the automatic cuts from having harmful consequences. Obama has been calling for a mix of spending cuts and tax increases to achieve deficit reduction goals.
Senate Minority Leader Mitch McConnell said the meeting will focus on ways to reduce government spending, but he indicated he's not backing down on his opposition, shared by many Republicans, to any new tax increases.
The automatic spending cuts to defense and other programs had been designed to be so ugly that Washington would be forced to avoid them and come up with a better way to tackle the country's $11.7 trillion debt. But the warring sides in Washington have spent this week assigning blame rather than seeking a bipartisan way out.
Obama, speaking to a group of business executives Wednesday night, said the cuts would be a "tumble downward" for the economy, though he acknowledged it could takes weeks before many Americans feel the full impact of the budget shrinking.
In a glimpse of the state of debate on Wednesday, Republicans and the White House bickered over whether the cuts would be under way by the time Friday's meeting started. A spokesman for Boehner said they would be in place; the White House countered that Obama would in fact have until midnight Friday to set them in motion.
Both parties have said the cuts could inflict major damage to government programs, the military and the economy at large. Experts believe the standoff is already slowing the fragile economy's recovery from the Great Recession.
There is breathing room, however, for political settlement if Friday's deadline comes and goes. Many of the cuts to hit the Defense Department and other federal agencies would come in later years and could be partially offset by cuts in programs that are wasteful or behind schedule.
Some Republicans seem ready to let the cuts take effect and let attention turn to avoiding the threat of the government shutdown.
Republican leaders have calculated that the automatic cuts need to be in place in order for them to be able to muster support from conservatives for the catchall spending bill to keep the government running. That's because many staunch conservatives want to preserve the cuts even as defense hawks and others fret about the harm that might do to the military and the economy. If the automatic cuts are dealt with before the government-wide funding bill gets a vote, there could be a conservative revolt.
The need to keep the government's doors open and lights on — or else suffer the first government shutdown since 1996 — requires the Republican-dominated House and the Democratic-controlled Senate to agree. Right now they hardly see eye to eye.
Republicans are planning for a vote next week on a bill to fund the day-to-day operations of the government through the Sept. 30 end of the 2013 fiscal year — while keeping in place the new $85 billion in cuts of 5 percent to domestic agencies and 8 percent to the military.
The Republican plan, unveiled to the rank and file on Wednesday, would award the Pentagon and the Veterans Administration with their line-by-line budgets, for a more-targeted rather than indiscriminate batch of military cuts, but would deny domestic agencies the same treatment. And that has whipped up opposition from Democratic senators. Domestic agencies would see their budgets frozen almost exactly as they are, which would mean no money for new initiatives such as cybersecurity or for routine increases for programs such as low-income housing.
"We're not going to do that," said Sen. Tom Harkin, a Democrat. "Of course not."
The Senate, meanwhile, is expected to vote Thursday on rival Democratic and Republican plans to replace the automatic spending cuts. Both bills are expected to fail.
The Democratic plan would forestall the cuts through the end of the year, replacing them with longer-term cuts to the Pentagon and cash payments to farmers and installing a minimum 30 percent tax rate on income exceeding $1 million.
Republicans in turn are considering offering a measure that would give Obama authority to propose a rewrite to the 2013 budget to redistribute the cuts. Obama would be unable to cut defense by more than the $43 billion reduction that the Pentagon currently faces, and would also be unable to raise taxes to undo the cuts.
The idea is that money could be transferred from lower-priority accounts to accounts funding air traffic control or meat inspection.
But Obama has rejected the idea, saying there's no smart way to cut such a large chunk from the budget over just seven months. The White House is also keenly aware that it would give Republicans an opening to blame Obama, instead of themselves, for every unpopular cut he makes.
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