Tags: obama | automatic | cuts | january

Obama's Vow Against Automatic Cuts Surprises Washington

Tuesday, 23 Oct 2012 01:40 PM

 

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President Barack Obama caught Capitol Hill by surprise with his comment that automatic spending cuts looming in January "will not happen," kindling hope among Democrats but doubt among Republicans that he has a viable plan to replace them.

In Monday night's debate against Republican Mitt Romney Obama did not say whether he had a specific plan in mind to avoid the $109 billion in cuts due to start on Jan. 2, or if he was merely hopeful Congress would act. The across-the-board reductions, known as a sequester, are to be divided equally between defense and non-defense programs.

Democrats said the comment showed Obama's determination to push an alternative deficit reduction plan in the post-election session of Congress to replace the automatic cuts - even if he is not ready to reveal details.

"The president made it very clear. It's not going to occur, he's not going to let it occur," said Representative Gerald Connolly, a Democrat whose northern Virginia district is home to thousands of defense and other government workers.

"That was very heartening to my constituents and the voters in Virginia," Connolly added.

Republicans put little credence in Obama's debate vow, saying he has never offered them a plan to avoid the cuts, which were set in motion by last year's debt limit deal.

A spokesman for Senate Republican Leader Mitch McConnell said: "We were all surprised by the president saying that the sequester 'will not happen' given that he still hasn't presented a plan to make sure it 'will not happen.'"

"While the Republican-led House has already taken action, Democrats in the Senate haven't even passed a budget, and the president has presented no plan to prevent the defense cuts."

The divided Congress is controlled in the House of Representatives by Republicans and the Senate by Democrats.

David Plouffe, White House senior adviser, was quoted suggesting to reporters immediately after the debate that Obama was merely expressing the same desire as everyone else.

"No one wants it to happen. ... No one thinks it should happen," Plouffe said.

Connolly said Obama would be "foolish" to release specifics of his plan in the "toxic" pre-election political environment.

"If you're concerned about the sequestration, the re-election of the president is the best dynamic we have because a re-elected President Obama in a lame duck session of this Congress will have the upper hand," he said.

A "lame-duck session" occurs after the election but before the newly chosen members take office in January and includes as voting members those lawmakers who were defeated in November.

Some analysts also were taking the president's comment quite seriously.

Greg Valliere, of Potomac Research Group, called it "the most significant statement in last night's debate: The president said a budget sequester "will not happen." This is the clearest indication yet that the fiscal cliff may be finessed or delayed."

Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut, said he thought the president's comment "increases uncertainty."

"I think it is reasonable to assume that it is kind of factually accurate that there won't be grand cuts that hit on day one of next year. I think that one would be advised to interpret it as not meaning that they won't happen, but that they won't happen on the first of the year."

The cuts are part of the so-called "fiscal cliff" of automatic spending reductions, known as a "sequester," and tax increases scheduled for the end of the year that the Congressional Budget Office has said could lead to a recession.

Kevin Smith, a spokesman for Speaker of the House John Boehner, said, "If the sequester isn't going to happen, as he says, will the president finally offer a plan to solve the problem? For the past year, the president has refused to show any leadership in resolving the sequester he proposed, so forgive us if we have doubts about his newfound desire to tackle the issue."

Republicans and Democrats alike oppose the trigger of the large spending cuts, in part because they land on almost every account in military and non-military programs, depriving Congress of the ability to think through the choices.

Congressional aides have said one of the ideas to help avoid the fiscal cliff would be to replace the automatic cuts with more targeted savings of about $55 billion. Later in the year, other ways to cut the burgeoning deficit would be looked at.

But it would not solve the problem of how to handle the $400 billion in a range of tax breaks enacted in 2001 and 2003 that are to expire Dec. 31.

Obama made the remark almost in passing as part of his response to criticism about his defense spending plans from Romney and charges that the sequestration was his administration's idea in the first place.

"First of all, the sequester is not something that I've proposed," he said. "It is something that Congress has proposed. It will not happen."

© 2014 Thomson/Reuters. All rights reserved.

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