White House Report Warns Congress Budget Cuts Are 'Destructive'
White House Report Warns Congress Budget Cuts Are ‘Destructive’
Brian Faler and Roger Runningen, ©2012 Bloomberg News
Published 9:25 p.m., Friday, September 14, 2012
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Sept. 15 (Bloomberg) -- An Obama administration report
cataloguing the impact of $1.2 trillion in looming spending cuts
illustrates the stakes as lawmakers debate what to do about the U.S.
deficit less than two months before the election.
The
White House budget office said the cuts, known as sequestration and set
to start in January, would undermine economic investment and cause
“severe harm” to initiatives including food-safety inspections,
air-traffic control and support for schools. The Pentagon
would be forced to juggle accounts to maintain the war effort and delay
repairing or buying equipment, according to the report
released yesterday.
“Sequestration would be deeply
destructive to national security, domestic investments and core
government functions,” the 394-page report said. “The administration
strongly believes that sequestration is bad policy, and that Congress
can and should take action to avoid it by passing a comprehensive and
balanced deficit reduction package.”
The report, ordered by Congress, comes less than two months before a presidential election in which President Barack Obama
and Republican Mitt Romney have offered starkly different plans to
address the government’s red ink. Obama is pressing to raise taxes on
the wealthiest Americans to help pay for government programs. Romney
argues that doing so would hit small businesses and hurt job creation at
a time when the unemployment rate has been above 8 percent for
43 months.
Punitive Step
The
automatic, across-the-board reductions would begin on Jan. 2, unless
Congress adopts an alternative, and would designate annual reductions
through 2021. The sequestration is a punitive step lawmakers imposed
upon themselves for failing last year to reach a deal to cut deficits by
at least $1.2 trillion over a decade.
The cuts in
fiscal 2013 would amount to $109.3 billion, equally drawn from defense
and non-defense programs, and would hit agencies in the middle of the
government’s fiscal year, according to the Office of Management and Budget report.
The
deficit is projected this year to reach $1.1 trillion, which would make
it the fourth consecutive year the government has run
trillion-dollar shortfalls.
That has contributed to
a recent run-up in the debt, which has climbed more than 75 percent in
the past four years. At $11.3 trillion, or 73 percent of the nation’s
gross domestic product, the publicly held debt this year is projected to
reach the highest level since shortly after World War II. Moody’s Investors Service
warned earlier this week it may join Standard & Poor’s in
downgrading the U.S.’s credit rating if lawmakers don’t agree next year
on a deficit plan.
Partisan Finger-Pointing
Neither
party wants to see the cuts imposed, though there is little agreement
on what to swap in their place, and lawmakers don’t plan to address the
issue in earnest until after the Nov. 6 election.
Obama’s
budget advisers said the reductions would affect more than 1,200 budget
accounts and blamed Republican lawmakers for focusing strictly on
spending cuts. House Republicans
have offered “particularly irresponsible approaches” that would “shift
the burden of deficit reduction onto the middle class and vulnerable
populations and represent the wrong choices for the nation’s long-term
growth,” the report said.
A plan endorsed in May by
House Republicans would replace much of next year’s cuts with savings
carved out of food stamps, Medicaid, federal workers’ benefits, the Consumer Financial Protection Bureau
and other spending programs. They would allow some of the scheduled
cuts to take effect, such as the 2 percent reduction in Medicare.
‘Common-Sense’ Cuts
The
Republican plan “replaces the president’s dangerous defense sequester
with common-sense spending cuts and reforms,” said House Speaker John Boehner, an Ohio Republican. “But with only a few months before they’re scheduled to go into effect, President Obama and Senate Democrats have taken no action whatsoever to avert these cuts.”
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