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Obama Proposes Short-Term Fix to Avert Sequester

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Obama asks Congress to pass a smaller package of spending cuts and tax code changes to avoid the sequester for a few months.

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President Barack Obama called Tuesday for a short-term solution to avoid across-the-board spending cuts, and he wants new revenue to be part of the deal.

“If Congress can’t . . . get a bigger package done by the time the sequester is scheduled to go into effect, then I believe they should at least pass a smaller package” to delay the cuts for a few months, Obama said at the White House.

The president’s call with less than a month to go before the onset of some $85 billion in cuts to federal programs this year sets up a likely showdown between the White House and its allies in Congress and Republicans who said Tuesday that they would seek their own plan for alternative spending cuts to replace the sequester.

“We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes,” said Speaker John A. Boehner, R-Ohio. “The president’s sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years.”

Obama pitted tax breaks for corporations and the wealthy against the sequester’s cuts to the military and other programs, in a challenge to Republicans who have vowed repeatedly that they are done compromising on more revenue. Obama said there is no reason the jobs of thousands of Americans and the growth of the economy should be put in jeopardy because Congress “couldn’t come together to eliminate a few special interest tax loopholes.”

A White House official earlier said that “uncertainty around the sequester is already having a negative impact on our economic growth, and if it was to take effect it would cost hundreds of thousands of American jobs and have devastating impacts on our economy.”

A White House official earlier said that the president hopes to give negotiators time to pass a broader deficit and budget package through “a smaller package of spending cuts and tax reforms to avoid the economically harmful consequences of the sequester for a few months. . . . While we need to deal with our deficits over the long term, we shouldn’t have workers being laid off, kids kicked off Head Start and food safety inspections cut while Congress completes the process.”

The sequester, included in the August 2011 deficit reduction agreement between the White House and Congress, would cut some $85 billion from federal programs during the current fiscal year. About $43 billion would come in Pentagon spending, and $26 billion would come from non-defense discretionary programs.

Those cuts are due to hit after the agreement Jan. 1 that pushed off the sequester for two months, but the White House says the uncertainty leading up to the original Jan. 2 deadline hit the economy toward the end of last year. The White House last week blamed a 0.1 percent decline in the gross domestic product in the fourth quarter — an unexpected decline, led in part by falling federal spending — in part on uncertainty over the sequester.

Obama emphasized at the White House that although the economy is poised to strengthen this year, it should not have to absorb another “self-inflicted wound.”

Boehner earlier Tuesday noted that the House in the previous Congress passed plans to replace the sequester. “It’s time for the Senate Democrats to do their work. It’s time for the president to offer his ideas for how to replace the sequester,” he said.

The Senate did not take up the bills that the House passed last year, with Democrats saying the proposals were aimed at loading cuts onto domestic discretionary spending while sparing defense spending and avoiding tax revenue to replace any of the reductions.

Other Republicans said they welcomed the president’s offer of a plan but said they would proceed with their own efforts that would not include tax revenue.

“In the coming days, we will be introducing legislation — as we did last year — to avoid the first year of defense budget cuts by reducing the size of the federal workforce through attrition,” said Sens. John McCain of Arizona, Lindsey Graham of South Carolina and Kelly Ayotte of New Hampshire.

Senate Majority Leader Harry Reid of Nevada has said he hopes to pass a measure to replace the sequester but that it could come after the March 1 deadline passes. It is unclear how federal agencies would respond in their day-to-day operations, but other Democrats said Tuesday that they welcome the new White House approach in the meantime.

“I agree with President Obama that if we can’t agree now on a long-term solution, the best thing for families and the economy would be to pass a balanced short-term sequestration replacement while the House and Senate work on our budget resolutions,” said Sen. Patty Murray of Washington, chairwoman of the Budget Committee.

Daniel Newhauser contributed to this report.

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