Spending cuts deal: Barack Obama pushes short-term solution in US budget battles

Feb 06 2013, 12:04 IST
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SummaryObama is pushing for another short-term solution to the budget battles.

US President Barack Obama is pushing for another short-term solution to the budget battles that have vexed Washington for months and still threaten the struggling U.S. economy, asking Congress Tuesday for temporary spending cuts and increased tax revenue to delay automatic across-the-board cuts slated for March 1.

With some conservative Republicans in Congress gearing up for letting the sharp automatic cuts take effect _ which some economists say would create another recession _ Obama called for spending cuts that would stave off the impending austerity measures.

The automatic cuts, which would hit everything from defense spending to popular benefit programs, were supposed to take effect Jan. 1. But Obama and congressional Republicans struck a dramatic New Year's Day deal that extended Bush-era tax cuts for all but the wealthiest Americans and put in place about $24 billion in deficit reduction. That delay effectively postponed the automatic reductions to March 1.

The automatic austerity measures are punishment for Washington's failure to strike a long-term budget pact.

Obama will ask for targeted ways to reduce the deficit, now running at more than $1 trillion a year, in the short term, perhaps several months. White House officials said that Congress needs more time to work out a 10-year plan worth more than $1 trillion in deficit reduction. Obama is not placing a time span or a dollar amount on the short-term plan. Officials said he will leave that to Congress. The accumulated U.S. debt has grown to more than $16 trillion.

Without mentioning specifics, Obama said he stood by his offer to the most powerful Republican in Congress, House of Representatives Speaker John Boehner, for a so-called grand bargain. Obama has said he is willing to see some cuts in the social safety net that protects older Americans.

"This doesn't have to happen,'' Obama said of the dramatic across-the-board cuts looming next month. He spoke in brief remarks at the White House, adding that there should be no reason for the "self-inflicted wounds,'' job losses and hits to already weak economic growth "just because folks in Washington'' couldn't come up with a plan to reform government spending and close loopholes in the federal income tax laws. He did not take questions.

He also emphasized the need for more revenues arguing: "We can't cut our way to prosperity.''

Boehner said in a statement that he opposed increased revenue, saying: "...Americans do not support sacrificing real spending cuts for more tax hikes.''

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