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Obama Calls For Small Package Of Cuts, Tax Changes To Head Off 'Sequester'

Feb 5, 2013
Originally published on February 6, 2013 7:02 am

(We updated the top of this post at 1:30 p.m. ET.)

Looking to head off deep, automatic spending cuts set to kick in on March 1, President Obama on Tuesday afternoon said that to avoid the negative economic effects that come with "political disfunction," Congress should move quickly to pass "a smaller package of spending cuts and tax reforms" that won't hurt the economy.

Acknowledging that Congress likely won't be able to pass a "full budget" by March 1 and avoid the so-called sequester that would bring sharp reductions in spending on defense and other programs, Obama pushed for a temporary plan that would give lawmakers another few months to negotiate on a larger deficit reduction package.

The president also used an early afternoon appearance in the White House briefing room to push for a long-term deal that includes a "balanced mix of spending cuts and more tax reform." He also said that "deals I put forward" in recent negotiations — such as changing the way entitlement programs are adjusted for the cost of living — "are still on the table."

Before the president's statement, House Speaker John Boehner, R-Ohio, released a statement saying that "Americans do not support replacing real spending cuts with more tax increases."

Our original post and an earlier update:

President Obama will "call on Congress to act to avoid the sequester and reduce the deficit in a balanced way." the White House says.

Officials tell the White House press corps that the president "will call on Congress to pass a smaller package of spending cuts and tax reforms to avoid the economically harmful consequences of the sequester for a few months." He's scheduled to issue that call around 1:15 p.m. ET.

As NPR's Ari Shapiro reports for our Newscast Desk:

"Congress created the sequester as a forcing mechanism. Across-the-board cuts would only take effect if lawmakers failed to agree on a deficit reduction plan. These cuts were designed to be so draconian that Congress would have no choice but to cut the deficit.

"That's not how it worked out.

"Congress failed to reach an agreement, and now the sequester is looming. The White House believes it's already hurting economic growth.

"So today, President Obama will call on Congress to pass a small package of spending cuts and tax changes.

"A White House official says this is intended to give more time to reach a solution that permanently avoids the sequester and significantly reduces the deficit."

We'll watch for more news from the president's statement.

Update at 1:05 p. m. ET. New Deficit Numbers And A Warning From The CBO:

There's a good chance the president will talk about this — the Congressional Budget Office just reported that:

"Economic growth will remain slow this year, CBO anticipates, as gradual improvement in many of the forces that drive the economy is offset by the effects of budgetary changes that are scheduled to occur under current law. ...

"f the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO's baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015."

We've added an audio player if you wish to hear NPR's coverage. It should be at the top of the post.

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