WASHINGTON (Reuters) – Just hours after across-the-board spending cuts officially took effect, President Barack Obama pressed Congress yesterday to work with him on a compromise to halt a fiscal crisis he said was starting to “inflict pain” on communities across the United States.
Obama and a bipartisan group of congressional leaders failed on Friday to avoid the deep spending reductions known as the “sequester,” which automatically kicked in overnight in the latest sign of dysfunction in a divided Washington.
If left in place without legislative remedy, government agencies will have to hack a total of $85 billion from their budgets between Saturday and Oct 1, cuts that over time could cause economic harm, slash jobs and curb military readiness.
“These cuts are not smart,” Obama said in his weekly radio and Internet address. “They will hurt our economy and cost us jobs. And Con-gress can turn them off at any time – as soon as both sides are willing to compromise.”
Obama signed an order on Friday night that started putting the cuts into effect.
At the heart of Washing-ton’s persistent fiscal showdowns is disagreement over how to slash the budget deficit and the $16 trillion national debt, bloated over the years by wars in Iraq and Afghanistan and government stimulus for the ailing economy.
The Democratic president wants to close the fiscal gap with spending cuts and tax hikes – what he calls a “balanced approach.” But Repub-licans do not want to concede again on taxes after doing so in negotiations over the “fiscal cliff” at the New Year.
“The discussion about revenue, in my view, is over. It’s about taking on the spending problem,” John Boehner, the Republican House of Repre-sentatives speaker, said on leaving the talks between Obama and congressional leaders on Friday.
As Obama and his aides have done for weeks, the president in his radio address offered a litany of hardships he said would flow from the sequester, saying, “Severe budget cuts … have already started to inflict pain on communities across the country.”
“Beginning this week, businesses that work with the military will have to lay folks off. Communities near military bases will take a serious blow. Hundreds of thousands of Americans who serve their country – Border Patrol agents, FBI agents, civilians who work for the Defense Department – will see their wages cut and their hours reduced,” he said.
“The longer these cuts remain in place, the greater the damage,” he said. “Econo-mists estimate they could eventually cost us more than 750,000 jobs and slow our economy by over one-half of one per cent.” Despite that, financial markets shrugged off the stalemate on Friday.
