WASHINGTON (USA TODAY) -- Preparing to leap into the fiscal unknown,
President Obama and congressional Republicans failed to reach a deal
Friday to avert the $85 billion in automatic, across-the-board budget
cuts set to begin at midnight.
"These cuts will hurt our economy, they will cost us jobs," Obama said after meeting with congressional leaders for a little less than an hour to discuss what is known as "the sequester."
attributed the "dumb, arbitrary" cuts to Republican refusal to agree to
a new debt reduction plan that includes higher taxes on wealthy
Americans through the closing of loopholes and deductions.
Speaker John Boehner, R-Ohio, said after the meeting that Obama got tax
hikes in the January agreement to end the last budget impasse, the
so-called fiscal cliff.
"The discussion about revenues in my view is over," Boehner said. "It's about cutting the spending in Washington."
The parties did appear to make progress on avoiding another
potential budget standoff down the road -- the March 27 expiration of
the continuing resolution that is funding the government; failing to
renew it could lead to a budget shutdown.
said Congress is planning to extend the continuing resolution for
funding government past its March 27 expiration date, so that sequester
talks will not be clouded by the prospect of a government shutdown.
president also sounded upbeat about avoiding a government shutdown,
saying he would sign an extension provided Congress sticks to budget
targets they have used in the past.
As for the
sequester, Obama said debt reduction should include both spending cuts
and higher taxes in the wealthy, calling it a "balanced plan" that can
end the cuts that will slow the economy, cost people jobs, and possibly
undermine national defense.
The president is expected to sign a formal sequestration order later Friday.
the sequester will hurt the economy, Obama predicted that the American
people will come through it; he also urged affected Americans to
pressure Republicans into reaching an agreement to end a sequester.
"This is not an apocalypse," Obama said. "It's just dumb."
Senate's top Republican, Mitch McConnell of Kentucky, had said before
the meeting that any alternative to the sequester must involve less
federal spending, not higher taxes.
"I'm happy to
discuss other ideas to keep our commitment to reducing Washington
spending at today's meeting," McConnell said. "But there will be no
last-minute, back-room deal and absolutely no agreement to increase
Obama and Vice President Biden met in the
Oval Office with a group of congressional leaders that included the top
two Republicans, McConnell and Boehner. The top
congressional Democrats -- Senate Majority Leader Harry Reid, D-Nev.,
and House Minority Leader Nancy Pelosi, D-Calif. -- also attended the
The meeting took place on deadline day for
the sequester, $85 billion in automatic domestic and defense cuts that
Democrats and Republicans say will hurt the economy and undermine
national security. The automatic, across-the-board sequester cuts become official at midnight.
But there are no signs the parties have made progress on the
issue that has divided them in this and previous budget disputes -- the
best way to cut a federal debt that now tops $16.5 trillion.
has called for debt reduction that includes both budget cuts and
increased tax revenue by eliminating loopholes and deductions that
benefit the wealthy.
"We should work together to reduce our deficit in a balanced way, by making smart spending cuts and closing special interest tax loopholes," Obama said in his statement.
meanwhile, say Obama got higher tax rates as part of a January
agreement to head off the series of tax hikes and spending cuts known as
"the fiscal cliff."
Boehner said Obama and Senate Democrats "are demanding more tax hikes to fuel more stimulus spending."
The White House meeting takes place a day after Senate Republicans and Democrats blocked each other's competing sequester plans.
After those Senate votes, Obama said that "we can
build on the over $2.5 trillion in deficit reduction we've already
achieved, but doing so will require Republicans to compromise. That's
how our democracy works, and that's what the American people deserve."
The sequester originated as part of a 2011 agreement to break another Obama-Republican budget impasse, raising the debt ceiling.
WATCH: Understand the sequester in 59 seconds
The idea: Require a series of automatic cuts, split between defense
and domestic programs, so onerous that the parties would be forced to
come up with a plan to cut more than $1 trillion off the debt in 10
While the parties have some progress, there has been no major debt reduction deal.
Barring a breakthrough at the White House meeting, Obama will be required by the law to issue a sequestration order by 11:59 p.m.Friday.
order will specify reductions in various budgets in amounts calculated
by the Office of Management and Budget, which would also transmit a
report on the cuts to Congress.
How the sequester might play out after Friday, both economically and politically, remains uncertain.
In a speech this week to a group of CEOs, Obama said the sequester "is not a cliff," but more of "a tumble downward."
At the White House on Friday, Obama said many
Americans may not feel the effects for months, but many face job
furloughs or a loss of Head Start services for their children. "I don't
anticipate a huge financial crisis," Obama said, "but people are going
to be hurt."
Obama said the economy will be hurt and so will the reputation of government.
"This is not a win for anybody," Obama said. "This is a loss for the American people."