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Obama Signals He’d Let Cuts Stand to Avoid U.S. Shutdown As Cuts Arrive, Parties Pledge to Call Off the Budget Wars
(about 9 hours later)
WASHINGTON — President Obama and Congressional leaders emerged from a White House meeting on Friday without resolution to the budget impasse, meaning that the across-the-board spending cuts that take effect Friday could remain in place for weeks if not months. WASHINGTON — President Obama and Congressional leaders failed on Friday to stop deep, automatic cuts in federal spending that will immediately shrink the size and ambition of government, even as they vowed an end to the rolling fiscal battles that have repeatedly threatened government shutdowns and economic crisis over two years.
Speaking to reporters after the hourlong meeting, Mr. Obama called the cuts “just dumb,” and criticized Republicans for their refusal to negotiate a package that includes some new revenue to balance those cuts. Emerging from an Oval Office meeting with the lawmakers, the president called the cuts “just dumb.” He said they would slow the economic recovery and spoke emotionally about their impact on people who would feel the consequences of government layoffs and disruptions in public services.
“The only thing we’ve seen from Republicans so far in terms of proposals is to replace this set of arbitrary cuts with even worse arbitrary cuts,” said Mr. Obama. “I don’t anticipate a huge financial crisis, but people are going to be hurt,” Mr. Obama said during a 35-minute news conference at the White House, in which he acknowledged that his campaign of highlighting fallout from the cuts had failed to persuade Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.
The president also signaled that he wants to avoid a clash with Congress that could shut down the government at the end of March even if it means allowing across-the-board cuts to remain in place for months, saying that the cuts will not amount to an “apocalypse.” “The pain, though, will be real,” he said. But both the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.
Mr. Obama’s comments came as Republican leaders made clear they had no intention of budging on the president’s demands that the across-the-board cuts be replaced with what he calls a “balanced” package of spending cuts and tax increases. The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion.
Speaker John A. Boehner emerged from the meeting after about an hour to indicate that little progress had been made toward bridging the differences between Republicans and the president. Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion.
“Let’s make it clear, the president got his tax hike on January 1st,” Mr. Boehner told reporters after the meeting ended. “The discussion about revenue, in my view, is over. It’s about taking on the spending problem here in Washington.” After locking in nearly $3.6 trillion in spending cuts and tax increases since 2011, the receding budget wars have left their mark on the nation’s balance sheet, said Alice Rivlin, a former White House budget director and former vice chairwoman of the Federal Reserve. But, she said, those successive budget deals have done nothing to address the nation’s long-term financial troubles as the population ages. They have, however, hurt the economy.
Sounding relaxed as he took questions from reporters, the president said he disagreed with that position and hoped that Republicans in Congress “come to their senses” in the weeks or even months ahead. But he seemed resigned that the deep cuts would remain in effect. “It does not get us on a track to stabilizing the debt, mostly because it’s the wrong kind of cut,” Ms. Rivlin said. “No, it makes things worse.”
He said he hoped Republicans would change their minds “after some reflection,” but he admitted: “It may take a couple of weeks. It may take a couple of months.” The two parties will now move to a broader argument over the right level of taxes and spending as they seek to develop a new budget for the coming year and beyond. Republicans said they welcomed a return to a more orderly budget process but warned they would not give in on their basic principles.
And the president appeared ready to move beyond the repeated fiscal debates in the last several years to the broader agenda he spelled out in the State of the Union speech, including gun control measures, pre-school, a higher minimum wage, an immigration overhaul and changes to the nation’s system of voting. “I will not be part of any back-room deal, and I will absolutely not agree to increase taxes,” said Senator Mitch McConnell of Kentucky, the Republican leader.
Mr. Obama summoned the four top Congressional leaders to the Oval Office in an effort to discuss how to move forward in the wake of the failure to avoid the cuts, known as sequestration, White House aides said. They said Mr. Obama would continue to push for a long-term budget deal that includes spending cuts and tax increases. After a public relations blitz lasting weeks that was aimed at stopping the cuts, Mr. Obama said he is prepared to extend a stopgap law that finances the government to March 27 if Republicans stick to an agreement worked out in 2011 about the level of federal spending. The decision will most likely allow the across-the-board spending reductions to remain in place for months if not years.
“We have an opportunity here still on the table for Congress to take up a balanced deal that would complete the job, and then some, of achieving more than $4 trillion of deficit reduction over 10 years, in a balanced way that helps our economy grow, that helps it create jobs,” Jay Carney, the president’s press secretary, said Thursday. White House officials and Senate Democrats had considered making one last stand around the March 27 deadline, declaring the Senate would not pass another government spending plan unless it undid the across-the-board cuts. But Senate Democrats were leery. The first furloughs are likely to hit in April, and the Democrats feared that little political pressure would have built on Republicans before the current stopgap spending law expired.
But ahead of Friday’s meeting, Republican leaders made clear that they had no intention of agreeing to such a deal, and said the president was prolonging the automatic cuts by insisting on tax increases. In a statement issued Friday morning, Senator Mitch McConnell of Kentucky, the Republican leader, showed little evidence of wavering. “The president has made it clear he does not want to shut down the government,” Senator Patty Murray of Washington, the Senate Budget Committee chairwoman, said Friday. “None of us do. That is another disruption that we just can’t afford right now.”
“I’m happy to discuss other ideas to keep our commitment to reducing Washington spending at today’s meeting,” Mr. McConnell said. “But there will be no last-minute, back-room deal and absolutely no agreement to increase taxes.” After the White House session, the House speaker, John A. Boehner, Republican of Ohio, said that he wanted to avoid a shutdown and that the House would begin advancing a financing measure next week. “I’m hopeful that we won’t have to deal with the threat of a government shutdown while we’re dealing with the sequester at the same time,” he told reporters.
The meeting between the president and the four lawmakers — Mr. Boehner; Senator Harry Reid, the majority leader; Representative Nancy Pelosi of California, the Democratic leader; and Mr. McConnell — is the first time since the end of last year that the group has gathered for a direct discussion about their differences. Republicans told the president during Friday’s meeting that they would not accept any new tax increases as an alternative to the across-the-board cuts, known as the sequester, and Mr. Obama said he did not intend to force the issue.
But the fact that the meeting was scheduled for the day the automatic cuts go into effect — and after members of Congress have left town for the weekend — was a clear signal that no one expects to make serious progress toward an agreement to undo the cuts. “Until Congress takes the sequester away, we’d have to abide by those additional cuts,” Mr. Obama conceded. “But there’s no reason why we should have another crisis by shutting the government down in addition to these arbitrary spending cuts.”
Republicans once denounced the across-the-board cuts as bad policy, especially for the military. But many in the party have now embraced them as a way to trim the size of government over the objections of the president and Democrats in Congress. At the Pentagon, the new defense secretary, Chuck Hagel, took a conciliatory tone, stepping away from months of dire predictions of disruption issued by the Defense Department.
Mr. Obama’s top advisers believe the impact of the cuts will be severe enough over the next several weeks that Republican lawmakers will be forced back to the bargaining table. “Today America has the best fighting force in the world, capable of responding to any challenge,” Mr. Hagel said. “This unnecessary budget crisis makes that job much harder. But we will continue to ensure America’s security.”
For Republicans, who lost a battle with the president over raising taxes at the end of last year, the agreement probably enshrines the lower levels of government spending for the remainder of the fiscal year, which ends Sept. 30. And it gives Mr. Boehner a victory to crow about with his increasingly conservative members.
But the president will probably benefit from the cold peace, too. He said he was ready to move beyond the repeated fiscal debates in the past several years to the broader agenda he spelled out in the State of the Union address, including gun control measures, universal preschool, a higher minimum wage, an immigration overhaul and changes to the nation’s system of voting.
“We can’t let political gridlock around the budget stand in the way of other areas where we can make progress,” Mr. Obama said.
In that sense, the White House meeting on Friday signaled a new political order after the deep divisions brought on by the Tea Party wave of 2010. The meeting was subdued, according to aides, with none of the tension of last November and December, when the president was locked away with Mr. Boehner, trying to head off huge automatic tax increases. Much of the session was devoted to the prosaic issue of keeping the government financed.
All that appears left to do in the short run may be a modest measure to give the Obama administration more discretion over how to mete out the cuts. That effort is already under way, led by Senators Mark Udall, Democrat of Colorado, and Susan Collins, Republican of Maine.
A “regular order” process to finance the government through 2014 will start quickly. The House Appropriations Committee will unveil legislation on Monday to cover spending through Sept. 30 at post-sequestration levels, with detailed spending instructions for the military to loosen some of the current spending strictures. That measure is expected to pass the House by Thursday, and lawmakers from both parties indicated they expected a quick resolution with the Senate.
By mid-March, Senator Murray and her House Budget Committee counterpart, Representative Paul Ryan of Wisconsin, will produce broad blueprints for spending and tax policy over 10 years, the next vehicles for bipartisanship on the deficit — if those budget plans can be reconciled.
That is doubtful. Mr. Ryan has said his plan will try to balance the budget within 10 years, without raising taxes and without any abrupt hits to Social Security and Medicare. His plan will lock in the savings from the across-the-board cuts but will shift the targets away from defense.
In contrast, Ms. Murray said, the Senate plan will undo the cuts beyond this fiscal year with a mix of tax increases and other spending reductions.