Obama, Congress leaders to meet as budget cuts hit

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Associated Press

Posted on February 27, 2013 at 11:37 AM

Updated Wednesday, Feb 27 at 3:01 PM

WASHINGTON (AP) — President Barack Obama will meet Friday with congressional leaders to discuss what to do about $85 billion in spending cuts that kick in that day, the White House said Wednesday.

It's the first face-to-face meeting between Obama and Republican leaders this year and the first sign of any negotiations on a deal to address the crisis.

The meeting will come hours after the Obama administration and a divided Congress officially miss the deadline for averting the cuts to defense and other programs, which had been designed to be so ugly that Washington would be forced to avoid them.

Before the White House announcement, there had appeared to be no talks under way to find a better way to tackle the country's $11.7 trillion debt. Some opposition Republicans had seemed ready to let the cuts take effect and let attention turn to an even more worrying fiscal deadline at the end of March — a possible government shutdown.

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.

White House spokesman Jay Carney said Friday's talks are designed to be a "constructive discussion" about how to keep the 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.

Government agencies are faced with cuts designed to force them to chop the same rough percentage across the board, whether or not certain budgets are already streamlined. They can't shift money from low-priority accounts to more high-priority ones. Everyone gets hit.

Agencies have been lining up to warn what would happen to all kinds of services. But Americans appear exhausted by the march of fiscal crises. Three out of 4 say they aren't following the spending cuts issue very closely, according to a Pew Research Center poll released this week.

The spending cuts would carve $85 billion from the U.S. budget through the end of the fiscal year at the end of September, and $1.2 trillion over the next decade.

The country's deficits have exceeded $1 trillion the past four years.

Economists agree that policymakers should delay the deep cuts until the economy has strengthened, but they say lawmakers should come up with a realistic long-term plan to fix the debt as soon as possible.

The cuts are "haphazard, and cuts good programs and bad. It's not good budgeting practice," says Mark Zandi, chief economist at Moody's Analytics.

Obama has warned that the cuts could hurt military readiness and called the move a "self-inflicted wound that doesn't have to happen."

But some opposition Republicans see the battle as their best opportunity to stand their ground and exact deep spending cuts from Obama — even if it means taking money from the Defense Department, a step Republican lawmakers have traditionally opposed.

Top Republicans support a plan that wouldn't replace the cuts but would give Obama's agency heads, such as incoming Defense Secretary Chuck Hagel, greater discretion in distributing them. The idea is that money could be transferred from lower-priority accounts.

But Obama 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.

Despite the grim predictions, there is breathing room 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.

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Associated Press writers Julie Pace, Josh Lederman, Nedra Pickler, Jim Kuhnhenn, Christopher S. Rugaber and Brock Vergakis contributed to this report.

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