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Obama's short-term deficit fix mixes taxes, spending cuts

8:42 AM, Feb 6, 2013   |    comments
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U.S. President Barack Obama speaks during his final news conference of his first term at the East Room of the White House January 14, 2013 in Washington, DC. (Getty Images)

WASHINGTON -- President Barack Obama is asking Congress for a short-term deficit-reduction package of spending cuts and tax revenue that will delay the effective date of steeper automatic cuts scheduled to kick in March 1. Obama said the cuts would be economically damaging and must be avoided.

The president reiterated his insistence on long-term deficit reduction that combines taxes and cuts, a blend that faces stiff resistance from antitax Republicans in Congress.

Obama made his case Tuesday in the White House briefing room, just minutes after the Congressional Budget Office released revised budget projections that showed that the deficit will drop to $845 billion this year, the first time during Obama's presidency that the red ink would fall below $1 trillion. The budget office also said the economy will grow slowly in 2013, hindered by a tax increase enacted in January and by the automatic spending cuts scheduled to take effect in March.

It is those cuts that Obama is seeking to put off with less-onerous measures. Neither the president nor White House aides specified what those measures should be.

"There's no reason that the jobs of thousands of American who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn't come together to eliminate a few special-interest tax loopholes or government programs that we agree need some reform," he said.

Obama said Congress needs more time to work out a 10-year plan worth more than $1 trillion in deficit reduction. He did not place a time span or a dollar amount on the short-term plan. Officials said he will leave that to Congress.

His request comes as some congressional Republicans were signaling that they might allow the automatic cuts to kick in as the only viable means of achieving deficit reduction, even though they'd cut into programs they support, such as defense.

The president's request would continue what has become a common practice in Washington -- dealing with fiscal issues in small steps in hopes that, over time, Congress and the administration will be able to agree on broader and more lasting policies. In his remarks, Obama alluded to the incremental nature of the work ahead.

"Let's keep on chipping away at this problem together, as Democrats and Republicans, to give our workers and our businesses the support that they need to thrive in the weeks and months ahead," Obama said.

Finding deficit reductions of up to $85 billion would put off the automatic cuts, known as a "sequester" in government budget language, until the start of the new fiscal year.

Obama has insisted that any efforts to reduce the deficit be balanced between spending cuts and new tax revenue. He already won about $600 billion in higher taxes at the start of the year, and congressional Republicans say they are not about to approve more tax revenue. Although the Senate has a Democratic majority, the House is controlled by the GOP.

In a statement earlier in the day, House Speaker John Boehner, R-Ohio, said that additional tax hikes were out of the question.

"President Obama first proposed the sequester and insisted it become law," Boehner said. "Republicans have twice voted to replace these arbitrary cuts with commonsense cuts and reforms that protect our national defense. We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes. 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."

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