U.S. President Barack Obama has urged Congress to delay automatic spending cuts set for March 1.
Speaking at the White House Tuesday, the president called on lawmakers to quickly pass a package of limited spending cuts and tax reforms until they can come up with a smarter solution to the nation’s debt problems.
Obama acknowledged that reaching agreement on a full budget may not happen before the March 1 deadline. But he cautioned against sweeping reductions.
“We can’t just cut our way to prosperity. Deep, indiscriminate cuts to things like education and training, energy and national security will cost us jobs and it will slow down our recovery. It’s not the right thing to do for the economy. It’s not the right thing for folks who are out there still looking for work. And the good news is this doesn’t have to happen,” he said.
The $1.2 trillion in cuts to domestic and defense programs are known as a sequester.
Republicans also are in favor of replacing the sequester, but say they disagree with Obama’s proposal for more tax increases. In a statement Tuesday, Senate Republican leader Mitch McConnell called on the president to lay out significant spending reforms now that Congress has acted on the tax issue. He warned that the clock is ticking, saying it is time to get serious.
Lawmakers established the automatic budget cuts in August 2011 as part of an agreement to raise the U.S. debt ceiling. The deal specified that the cuts would go into effect this past January if a special supercommittee failed to trim the deficit by an equal amount over a 10-year period.
The supercommittee failed, forcing Congress to act to delay the cuts, which coupled with automatic tax increases, were dubbed the fiscal cliff. But the lawmakers’ Jan. 1 agreement, which raised tax rates on the wealthiest Americans, only postponed the cuts for two months.
Obama said there is no reason for thousands of jobs to be put in jeopardy just because lawmakers could not come together to eliminate tax loopholes or government programs that they agree need reform.
“Our economy right now is headed in the right direction, and it will stay that way as long as there aren’t any more self-inflicted wounds coming out of Washington,” said Obama.
A White House statement said uncertainty around the sequester is already having a negative impact on the nation’s economic growth.
Last week, the government reported the U.S. economy contracted unexpectedly in the final three months of last year, partly because of lower defense spending.