Bloomberg News

Obama Aides Say Cuts Would Hit Programs From Food to Schools

February 08, 2013

U.S. House Speaker John Boehner

U.S. House Speaker John Boehner has said he'll oppose any delay of the so-called sequester unless Congress and the administration come up with other cuts and reforms. Photographer: Andrew Harrer/Bloomberg

The Obama administration began a public campaign to head off scheduled automatic budget cuts that the administration said would reduce spending on programs including education, small business loans, food safety inspections and defense.

The across-the-board cuts, known as sequestration, “would cause very significant disruptions that would be felt far and wide across the country,” Danny Werfel, federal controller of the Office of Management and Budget, said today in a briefing.

Werfel said the effects would include 600,000 women and children losing nutrition assistance, 70,000 children taken out of early childhood education programs, 2,100 fewer food inspections and a reduction of as many as 12,000 scientists and students who help conduct research on disease or other subjects.

The March 1 deadline for the cuts to take effect marks another fiscal showdown between President Barack Obama and congressional Republicans. Unless Congress acts, an estimated $85 billion in budget cuts, divided about evenly between defense and domestic programs, are set to kick in. That’s part of the $1.2 trillion scheduled to be cut over 10 years.

“There is no reason, no reason, for that to happen,” Obama said today at a farewell ceremony for Defense Secretary Leon Panetta. “Putting our fiscal house in order calls for a balanced approach, not massive, indiscriminate cuts that could have a severe impact on our military preparedness.”

The president told House Democrats yesterday he is “prepared, eager and anxious to do a big deal” of larger spending reduction and tax increases to shrink the deficit.

Republican View

House Speaker John Boehner, an Ohio Republican, has said he’ll oppose any delay of the so-called sequester unless Congress and the administration come up with other “cuts and reforms.”

His spokesman, Brendan Buck, said Boehner agrees that the sequester is the wrong way to cut spending. Still, he said Obama got a $650 billion tax increase on top earners as part of the last budget deal, enacted on Jan. 2, and that it’s time to make cuts in federal spending.

“The president is out of excuses,” Buck said in a statement today. “We’re glad they’re laying out the devastating consequences of the president’s sequester, but the question remains: What are they willing to do to prevent it?”

Obama and Congress agreed to the automatic cuts in August 2011 as part of an accord to raise the U.S. debt ceiling.

Substitute Plan

Among Democrats, Senate Majority Leader Harry Reid of Nevada, Washington Senator Patty Murray, who is chairwoman of the Budget Committee, and others are working on a substitute fiscal plan that may be released next week after Obama delivers his State of the Union address on Feb. 12.

Werfel briefed reporters with Jason Furman, principal deputy director of the White House National Economic Council, as the administration sought to ramp up pressure on Republicans for a deal.

Furman said the cut in spending would cost “hundreds of thousands of jobs” in the U.S., including federal employees.

While there are signs of strength in the housing market and gains in hiring, forecasters predict a slower U.S. economic expansion as tax increases and spending cuts crimp growth and the global economy remains weak.

After the U.S. economy advanced at a 3.1 percent annual rate in the third quarter, the government reported last week that it stalled in the final three months of the year, registering a 0.1 percent decline in part because of lower defense spending. The median estimate of economists surveyed by Bloomberg is for growth of just 2 percent this year.

GDP Forecast

The nonpartisan Congressional Budget Office said in its forecast issued Feb. 5 that the economy would expand by 1.4 percent in 2013, partly because of budget-cutting in Washington. The CBO predicts growth would increase to 3.4 percent the following year.

Furman said the White House had “no opinion” on the agency’s forecast, while adding that “they’re never very far off.”

The Defense Department is preparing for the prospect of losing funding this year. Panetta is delaying the deployment of an aircraft carrier to the Persian Gulf to save money and the Pentagon has issued a memo authorizing the firing of temporary defense workers and furloughs for civilian employees.

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.net; Margaret Talev in Washington at mtalev@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus