Obama signs order to begin spending cuts
Obama acted Friday, the deadline for the president and Congress to avoid the steep, one-year cuts.
Obama has insisted on replacing the cuts, known as a "sequester" in government budget language, with tax increases and cuts spread out over time. Republicans have rejected any plan that included tax revenue.
The government says the reductions will soon result in furlough notices to government employees and will trim government spending on defense contracts and in domestic government programs. Active military personnel and anti-poverty and low-income assistance programs are largely protected from the cuts.
President Barack Obama is convinced the U.S. will overcome effects of sequestration, but not without damage to the national economy.He was speaking at a White House press conference.“This is not going to be an apocalypse I think, as some people said. It's just dumb. It's going to hurt people” – he said.
According to him, the consequences of the cuts kicking in this month will impact Americans who belong to the middle class. "This will cause a chain reaction affecting the entire economy. We shall lose about 750,000 jobs, while we need to be creating jobs as soon as possible", - said the head of state.
The automatic budget sequestration begins after March 1st, presupposing spending cuts worth $ 1.2 trln over the next ten years, and $ 85 bln by the end of the current fiscal year.
The US government stumbled headlong on Friday toward wide-ranging spending cuts that threaten to hinder the nation's economic recovery, after President Barack Obama and congressional leaders failed to find an alternative budget plan.
The inflexible plan, locked in during a bout of deficit-reduction fever in 2011, initiates time-released cuts that can only be halted by agreement between Congress and the White House.
A deal proved elusive in talks at the White House on Friday, meaning that government agencies will now begin to hack a total of $85 billion from their budgets between now and October 1.
Democrats predict these cuts could soon cause air traffic delays, furloughs for hundreds of thousands of federal employees and disruption to education and law enforcement.
The full brunt of the automatic cuts will be borne over seven months, and Congress can stop them at any time if the two parties agree on how to do so.
But Obama was resigned to budgets shrinking.
Given the absence of a deal, Obama is required by midnight to issue an order to federal agencies to reduce their budgets in a process known as "sequestration." The White House budget office must send a report to Congress detailing the spending cuts.
The stalemate in Washington didn't appear to affect U.S. stocks, with the Dow Jones Industrials up 45 points shortly after midday on Friday, recovering from earlier losses on encouraging manufacturing data.
President Barack Obama heaped blame on Republicans on Friday for the failure to break a deadlock in efforts to avert looming automatic spending cuts and warned that a "ripple effect" would start hurting the middle class and the overall US economy.
In a news conference after talks with congressional leaders, Obama said he hoped that Republicans, after hearing complaints from their constituents about the impacts of the cuts, will come back to the bargaining table. He predicted this would take two weeks to two months.
The president rejected a reporter's suggestion that he could force Republicans to remain at the White House until they reach an agreement.
"I'm not a dictator, I'm the president," he said.
Obama, who met for about an hour with the top two Republicans and top two Democrats in Congress, said he would keep reaching out to a "caucus of common sense" among lawmakers on Capitol Hill and is looking for a compromise in coming days and weeks once the cuts start taking effect later on Friday.
Obama wants Republicans to agree to eliminate tax loopholes enjoyed largely by the wealthy in order to help reduce the U.S. budget deficit. Republicans have ruled out raising taxes and want spending cuts instead.
Obama pointed to polls that suggest more Americans agree with him than with his opponents.
"We just need Republicans in Congress to catch up with their own party and the country on this," he said.
The White House and US Congress have failed to agree on how they are going to avert $1.2trln worth of spending cuts spread over the coming 10 years.
This fiscal year alone, the sequestration should amount to $85bln, hitting defence and social expenditure. The cuts are kicking in this month.
Emerging from talks with congressional leaders Friday, President Obama said America is going to lose about 750,000 jobs.
President Barack Obama began a meeting with congressional leaders on Friday to discuss a series of automatic spending cuts that start to take effect later in the day, talks that were not expected to result in a last-minute deal.
Obama and Vice President Joe Biden met with Senate Majority Leader Harry Reid, Senate Republican leaderMitch McConnell, House of Representatives Speaker John Boehner, the top US Republican, and House Democratic leader Nancy Pelosi.
The U.S. government hurtled on Friday toward making deep spending cuts that threaten to hinder the nation's economic recovery, after Republicans and Democrats failed to agree on an alternative deficit-reduction plan.
Locked in during a bout of deficit-reduction fever in 2011, the time-released "automatic" cuts can only be halted by agreement between Republican lawmakers and the White House.
That has proved elusive so far.
Both sides still hope the other will either be blamed by voters for the cuts or cave in before the worst effects, like air traffic chaos or furloughs for tens of thousands of federal employees, start to bite in the coming weeks.
Barring any breakthroughs in the next few hours, the cuts will begin to come into force at some time before midnight on Friday night. The full brunt of the belt tightening, known in Washington as "sequestration," will take effect over seven months so it is not clear if there will be an immediate disruption to public services.
President Barack Obama meets top leaders of Congress at the White House at 10 a.m. EST (1500 GMT) to explore ways to avoid the unprecedented, across-the-board cuts totaling $85 billion.
But expectations were low for a deal when the Democratic president huddles with Senate Majority LeaderHarry Reid, Senate Republican leader Mitch McConnell, House of Representatives Speaker John Boehner, the top U.S. Republican, and House Democratic leader Nancy Pelosi.
Democrats insist tax increases be part of a solution to ending the automatic cuts, an idea Republicans reject.
"We should work together to reduce our deficit in a balanced way - by making smart spending cuts and closing special interest tax loopholes," Obama said on Thursday.
Congress can stop the cuts at any time after they start on Friday if the parties agree to that. In the absence of any deal at all, the Pentagon will be forced to slice 13 percent of its budget between now and September 30. Most non-defense programs, from NASA space exploration to federally backed education and law enforcement, face a 9 percent reduction.
The International Monetary Fund warns that the cutbacks could knock at least 0.5 percentage point off U.S. economic growth this year and slow the global economy.
Voice of Russia, Reuters, RIA, AP