Obama presses Congress on the latest fiscal debate

Michael D. Shear and Jackie Calmes / New York Times News Service /

WASHINGTON — President Barack Obama on Tuesday called on Congress to quickly pass a new package of limited spending cuts and tax increases to head off substantial across-the-board reductions to domestic and military spending set to begin on March 1, but his appeal for more revenue was dismissed by Republicans.

Trying to gain the upper hand in the latest fiscal clash, Obama said Congress should delay the reductions for at least a few months to give lawmakers a chance to negotiate a full deficit reduction package that permanently resolves the threat of a so-called sequester.

“They should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months,” Obama said Tuesday afternoon in the White House briefing room. He said there was no reason to put at risk “the jobs of thousands of Americans.”

The president said the economy, which unexpectedly contracted at the end of last year, had begun to recover slowly. But he warned that continuing fights over taxes and spending threaten to delay or derail that improvement.

“We’ve also seen the effects that political dysfunction can have,” Obama said. “We’ve made progress. And I still believe we can finish the job with a balanced mix of spending cuts and more tax reform.”

Sen. Mitch McConnell of Kentucky, the Republican leader, mocked the president’s demands to close tax loopholes, calling them “gimmicky tax hikes” and said, “It’s time for Washington Democrats to get real.” House Republicans noted that they had already passed their own plans to avoid the sequester.

With the deadline looming, each party is eager to blame the other for consequences that could include thousands of layoffs at military contractors, service reductions in programs for the needy and a new economic slump.

Obama, who missed a deadline this week to submit his annual budget to Congress, acknowledged Tuesday that a broader deficit agreement is unlikely to be reached by the March deadline. He provided no details about the tens of billions of dollars in spending cuts and tax adjustments that he wants Congress to pass quickly. More specific could come when he delivers his State of the Union address next Tuesday.

“While it’s critical for us to cut wasteful spending, we can’t just cut our way to prosperity,” the president said, returning to fiscal issues after several weeks focused on gun control and immigration. “I still believe that we can finish the job with a balanced mix of spending cuts and more tax reform.”

Without action in the next three weeks, federal law will set off automatic cuts worth about $1.2 trillion over the next decade. Obama and Republicans in Congress designed the cuts in 2011 to be devastating as a way to prod passage of a more thoughtful deficit reduction approach, but no agreement has been reached.

Obama spoke as the nonpartisan Congressional Budget Office released its annual economic report with the latest 10-year projections for the annual federal budget deficits. It provided some fodder to critics on the left and some economists who say that Washington’s continued emphasis on immediate deficit reduction is constraining economic growth, though the budget office said lower deficits would help the economy starting in 2014.

Business and labor ally on immigration

Unlikely allies, business and labor leaders joined in support of the White House’s immigration overhaul efforts Tuesday while also launching high-stakes negotiations to overcome an issue that has split them before — creating a guest-worker program to ensure future immigrants come to the U.S. legally.

The broad agreement on a need for immigration changes and a pathway to citizenship for an estimated 11 million illegal immigrants already here is driven largely by self-interest. Both business and labor see an overhaul of the nation’s broken immigration system as a way to boost economic competitiveness with other nations while increasing the ranks of workers and union members.

For President Barack Obama, a partnership between factions that have often been at odds — both with each other and with the White House — allows him to turn up pressure on Congress and try to isolate congressional Republicans who oppose parts of an immigration overhaul. Obama held separate private meetings at the White House on Tuesday with labor leaders and top business executives.

— The Associated Press