As Obama readies economy-focused State of the Union speech, defense cuts loom

11:03 AM, Feb 11, 2013   |    comments
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(CBS NEWS) -- President Obama's upcoming State of the Union address on Tuesday is expected to focus on economic revitalization in America, according to presidential aides.

But Mr. Obama's account of the U.S. economic recovery will carry with it an asterisk: the automatic spending cuts of the so-called sequester, due to land at the beginning of March, could deal severe a severe blow to the economy. And less than three weeks out from the onset of sequestration, there is no resolution in sight.

Based on the punchy performance of several key congressional players on the Sunday political talk shows, the parties remain deeply divided on the best path to avert the sequester, with disputes over spending, taxation, and entitlement reform threatening to scuttle any eventual deal.

House Minority Leader Nancy Pelosi, D-Calif., laid down the gauntlet on "Fox News Sunday", saying that Congress must act to avert the sequester - but not if it means cutting too deeply into Democratic spending priorities.

"It's almost a false argument to say we have a spending problem," she said, pointing to cuts in agriculture subsidies and the 2011 Budget Control Act that slashed hundreds of billions of dollars from discretionary spending. "We've had plenty of spending cuts...what we do need is more revenue and more cuts."

"What I would like to a big, balanced, bold proposal" to reduce the deficit, she said. "Short of that, we must do something to avoid the sequester."

Pelosi's suggestion echoed the president's weekly address over the weekend, in which he called on Congress to pass "balanced cuts and close more tax loopholes until they can find a way to replace the sequester with a smarter, longer-term solution."

House Majority Leader Eric Cantor, R-Va., speaking on NBC's "Meet the Press", would not accept Democrats' calls for more revenue. "Every time you turn around," Cantor said, the Democrats' "answer is to raise taxes."

The president "just got his tax hike on the wealthy," Cantor said, referring to the recent "fiscal cliff" deal that allowed taxes to rise on personal income in excess of $400,000. "You can't, in this town, turn around and raise taxes every three months. Again, every time, that's his response."

"The House has put forward an alternative plan, and there's been no response" from Democrats, Cantor said. "The bottom line is we want tax reform, but we want to plug those loopholes that the president talks about, to bring down tax rates, because we believe that's pro growth...the president's not talking about that. He's talking about raising more taxes to spend."

Rep. Tom Cole, R-Okla., seconded Cantor on ABC's "This Week", saying Republicans would "absolutely not" agree to new revenue as part of a sequester deal.

Cole, who angered some conservatives by counseling Republicans to accede to tax hikes for the wealthy during the "fiscal cliff" negotiations, was notably inflexible on the question of raising more revenue. "The president accepted no spending cuts back in the fiscal cliff deal 45 days ago," he said. "So you get no spending cuts back then, then you're going to get no revenue now."

But despite the anti-tax rigidity voiced by some Republicans, others kept their options open. On "Fox News Sunday", Sen. John McCain, R-Ariz., refused to rule out the possibility that a deal to avoid the sequester could include more revenue.

"We've got to avoid it, we've got to stop it," McCain said of the sequester. "Would I look at some revenue closers? Maybe so."

But that doesn't mean he would be happy about it. "We've already just raised taxes. Why do we have to raise taxes again?" he asked.

McCain also blasted what he saw as presidential disengagement on the issue. "What I would like to see is the president call the leaders over to the White House and say, 'Look, we've got to solve this problem," he said. "All he does is go out and make speeches."

On Tuesday, at least, the president will have no choice but to "go out and make speeches." And after Tuesday, more speeches: the president will hit the road, campaign-style, traveling to Asheville, N.C., Atlanta and Chicago to sell the economic proposals he will lay out Tuesday night.

Beyond his economic message, Mr. Obama is also expected to use the State of the Union to lobby for his three biggest second-term agenda items: immigration reform, climate change, and gun control.

Gun control, in particular, will be one of the most closely watched themes of the president's address. More than 20 House Democrats have announced that they will bring people affected by gun violence as guests to the address. And on Saturday, CBS News learned that former Rep. Gabrielle Giffords and her husband Mark Kelly will attend the speech as guests of Sen. John McCain and Rep. Ron Barber, D-Ariz. Giffords has emerged as one of the faces of gun violence in America after being shot in the head and nearly killed during a mass shooting in Arizona two years ago.

The official response to the State of the Union will be delivered by rising conservative star Sen. Marco Rubio, R-Fla., who is expected to stress limited government and free enterprise as the keys to economic recovery.

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