New crisis looms as budget cuts hit US on Friday
By Steven R. Hurst | AP - WASHINGTON
01st March 2013 10:38 AM
Sweeping U.S. government spending cuts totaling $85 billion begin taking effect Friday, slicing deeply into military and other programs in an unwanted move toward austerity that displays Washington's paralyzing partisan divisions.
The cuts are kicking after the White House and congressional Republicans could not overcome bitter disagreements and come up with a better plan to tackle the country's $11.7 trillion debt. The warring sides have spent this week assigning blame rather than seeking a way out, and rival Democratic and Republican measures to modify the cuts failed in the Senate on Thursday.
The automatic spending reductions are part of a law passed two years ago and designed to be so off-putting to both Democrats and Republicans as to force a compromise. It didn't work, although White House press secretary Jay Carney said the cuts will be put into force as close to midnight as possible on Friday because President Barack Obama is "ever hopeful."
The immediate impact of the cuts on the public was uncertain, and the administration pulled back on its earlier warnings of long lines developing quickly at airports and teacher layoffs affecting classrooms. It's expected to be fiscal speed-bump on the road to economic recovery that is otherwise looking good.
The cuts would carve 5 percent from domestic agencies and 8 percent from the Pentagon between now and Oct. 1 but would leave several major programs alone, including the Social Security pension program, the Medicaid health care program for the poor and food stamps.
Federal agencies must give workers a month's notice before imposing furloughs, which will likely force many to take one day a week of unpaid leave indefinitely. The delay gives lawmakers time to seek a deal that might retroactively reverse the spending cuts before they could do much damage to the economy.
But the painful cuts are just the first of a series of budget crises that will confront Congress and the White House before summer.
Obama is meeting congressional leaders of both parties Friday but the talks will look past the automatic spending cuts to the next looming fiscal fight: a possible government shutdown. The annual ritual of passing agency spending bills collapsed entirely last year, and Congress must act by March 27 to prevent the partial shutdown.
Then, in April, Congress will confront a renewed standoff on increasing the government's borrowing limit — the same the issue that, two years ago, spawned the law forcing the current spending cuts in the first place. Failure to raise the borrowing limit could force the U.S. to default on debt for the first time in history.
So entrenched are the two parties that chaplain Barry Black opened the Senate session Thursday with a prayer that beseeched a higher power to intervene.
"Rise up, O God, and save us from ourselves," he said.
But the rival plans for averting the automatic spending cuts were doomed even before the Senate vote. The proposals were introduced more as a tactic to allow senators to underline their partisan loyalty and save their parties from public blame for any resulting fallout.
Democrats thwarted a Republican proposal that would have required Obama to propose alternative cuts that would cause less disruption in essential government services. Moments later, a Democratic alternative to spread the cuts over a decade and replace half with higher taxes on millionaires and corporations met the same fate.
In a written statement after the votes, Obama lambasted Republicans. "They voted to let the entire burden of deficit reduction fall squarely on the middle class," he said.
Said House Speaker John Boehner, the top Republican in Congress: "Obama and Senate Democrats are demanding more tax hikes to fuel more 'stimulus' spending."
With negotiations set to begin Friday at the White House, some Republicans held out hope the current struggle might lead to talks on completing work on the final piece of a deficit reduction package that has been more than two agonizing years in the making. The opposition party wants to overhaul the U.S. tax law and win reductions in social safety net programs, the federal pension system and medical insurance for Americans of retirement age and health care for the poor.
Obama and some Democrats are willing to see some small alterations to those programs but nothing on the scale sought by Republicans. And the Democrats want to raise taxes on the wealthy to, in part, fund new or expanded government programs. Republicans want any increase in tax revenue to go straight toward reducing the debt.
In a cycle of crisis followed by compromise over the past two years, Obama and congressional Republicans have agreed to more than $3.6 trillion in long-term deficit savings over a decade. While much of that has come from spending restraint, Republicans allowed legislation pass late last year that raised taxes on upper-income Americans by $600 million.
None of the savings to date has come from the big benefit programs that lawmakers in both parties say must be tackled if the country is to gain control over its finances. Each party fears the political fallout of confronting them on their own, but Democrats, in particular, are reluctant to scale back programs that they count as their political birthright.
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