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Automatic Spending Cut Would Cause 'Hardship' For People

Feb 20, 2013
Originally published on February 20, 2013 4:39 pm

Transcript

STEVE INSKEEP, HOST:

It's MORNING EDITION from NPR News. Good morning, I'm Steve Inskeep.

RENEE MONTAGNE, HOST:

And I'm Renee Montagne.

Today, the Pentagon is to notify Members of Congress about its plans to furlough some 800,000 civilian employees later this spring. That's just one dramatic consequence of the federal government's automatic spending cuts. Those cuts are due to take effect at the end of next week. President Obama is urging Congress to stop the automatic cuts, at least temporarily, while lawmakers try to craft a more lasting budget agreement.

NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: The automatic spending cuts, $85 billion worth, would hit just about every corner of the federal government: food inspectors, FBI agents, Head Start and the military. President Obama likened the cuts to a meat cleaver and said they're the last thing the country needs.

PRESIDENT BARACK OBAMA: Won't help the economy. Won't create jobs. Will visit hardship on a whole lot of people.

HORSLEY: Independent economists agree. A research note this week from the firm Macroeconomic Advisors said, while the cuts would not be catastrophic, they would slow economic growth by more than half a percentage point this year, and cost some 700,000 jobs.

The firm said a far better way to tackle the deficit would be more targeted spending cuts, coupled with higher tax revenues. The president plans to keep making that case in an effort to prevent across-the-board cuts from taking hold.

OBAMA: Democrats, Republicans, business leaders and economists, they've already said that these cuts - known here in Washington as sequestration - are a bad idea. They're not good for our economy. They're not how we should run our government. And here's the thing: they don't have to happen.

HORSLEY: Congressional Republicans and Democrats have both proposed alternatives to the automatic cuts. But like a broken record, they're divided over whether that should include higher tax revenues. Democrats say yes. Republicans say no.

Obama has proposed raising additional revenue by limiting tax breaks available to the wealthy. He and his aides think Republican opposition to that plan will become a political liability for the GOP.

OBAMA: Are you willing to see a bunch of first-responders lose their job because you want to protect some special interest tax loophole?

HORSLEY: But after allowing taxes on top earners to rise earlier this year, Republican House speaker John Boehner ruled out any additional tax increase. Boehner said in a statement, yesterday, the American people understand that the revenue debate is now closed.

Not so fast, according to former Republican Senator Alan Simpson and his deficit-cutting sidekick Erskine Bowles. The former co-chairs of the president's deficit-cutting commission offered an update to their plan yesterday. It calls for $600 billion in additional tax revenue and another 600 billion in cuts to government health care programs.

Bowles told a politico breakfast, he thinks the president is game.

ERSKINE BOWLES: I believe that he's willing to make these cuts in entitlement programs that we have to make. That doesn't mean I don't want to continue to push him outside of his comfort zone, to go a little further than he might want to go otherwise. And I think, you know, again, we're going to have to push the Republicans in order to do the tax reform that allows us to reduce the deficit in the same manner.

HORSLEY: Simpson agreed. The president has every incentive to make a deal, even if it means challenging some members of his own party on entitlement programs.

ALAN SIMPSON: He knows what to do and if he doesn't get a handle on the entitlements, he will have a failed presidency. I don't think he wants that at all. He's too smart.

HORSLEY: Obama was offering a similar combination of tax revenues and cuts to health care spending in December, when Republican Boehner abruptly walked away from the negotiations. The president and his aides say that offer still stands.

OBAMA: So my door is open. I've put tough cuts and reforms on the table. I'm willing to work with anybody to get this job done.

HORSLEY: So far, though, that grand bargain has proved elusive, which is why the country is now facing indiscriminate spending cuts that neither party says they want.

Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.