President Barack Obama urged Congress to postpone automatic spending cuts scheduled to begin March 1 to avoid “real and lasting impacts” on U.S. economic growth.
Obama said lawmakers should act on a smaller package of spending cuts and changes to the tax code that would increase revenue, such as limiting tax breaks, to replace part of the $1.2 trillion in across-the-board reductions.
“Deep, indiscriminate cuts” in federal spending “will cost us jobs and slow down our recovery,” Obama said at the White House. “This doesn’t have to happen.”
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The March 1 deadline marks another fiscal showdown between the administration and Republicans, who have a majority in the House of Representatives. Republican leaders have said they expect the spending cuts to take effect, partly because they won’t agree to new revenue measures that Obama and some other Democrats have said they want.
“We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes,” House Speaker John Boehner, a Republican from Ohio, said today in a statement.
While there are signs of strength in the housing market and gains in hiring, forecasters predict a slower U.S. economic expansion as tax increases and spending cuts crimp growth and demand for exports drops with a weakening global economy.
Economic Growth
After the U.S. economy advanced at a 3.1 percent rate in the third quarter, the government reported last week that it stalled in the final three months of the year, registering a 0.1 percent annualized decline in part because of lower defense spending.
“Our economy right now is headed in the right direction and will stay that way as long as there aren’t any more self- inflicted wounds coming out of Washington,” Obama said.
Congress created the automatic cuts in August 2011 as part of an agreement to raise the U.S. debt ceiling. They were set to begin in January, though Congress delayed them for two months in a Jan. 1 measure that let tax rates rise on top earners’ income.
Democrats are debating alternatives for replacing the spending cuts during a closed-door retreat today in Annapolis, Maryland. Senate leaders including Patty Murray of Washington, chairwoman of the Budget Committee, and Appropriations Committee Chairwoman Barbara Mikulski of Maryland will address lawmakers on fiscal issues.
There is no agreement on what options Democrats will choose or how big the plan should be, said two Democratic aides, who sought anonymity to discuss the private talks.
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