Sun. Apr 21st, 2024

President Barack Obama warned the US economy would take a “big hit” and other countries would also suffer when harsh automatic spending cuts come into force within 48 hours.


Obama, global economy, harsh automatic spending cuts
US President Barack Obama speaks to members of the Business Council during a dinner February 27, 2013 in Washington, DC. Obama warned the US economy would take a “big hit” and other countries would also suffer when harsh automatic spending cuts come into force within 48 hours.

Obama invited congressional leaders to the White House on Friday — the day the $85 billion in cuts begin, as he renewed his warnings to Republicans that a deal to avert the so-called sequester must include new tax revenue.

“This is going to be a big hit on the economy, both the private sector, as well as the public sector — economists are estimating we could lose as much as six tenths of a point, maybe a little bit more, of economic growth,” the president said.

“The worst part of it is, it is entirely unnecessary. It is not what we should be doing,” the president told the Business Council, a body grouping CEOs of big US firms.

“If you look right now at what our economy needs, taking $85 billion out of it over the next six months, indiscriminately, arbitrarily, without a strategy behind it — that is not a smart thing to do.”

Obama also warned the cuts would make the global economy “weaker” because the United States was currently doing “significantly better” than some other major industrialized nations.

For the White House talks, the president summoned Republican House Speaker John Boehner and Senate Minority Leader Mitch McConnell, Democratic Senate Majority Leader Harry Reid and House Democratic boss Nancy Pelosi.

Some Republicans privately complained that the fact that the meeting was called for the day the cuts come into force meant the White House was not serious about stopping the sequester.

“The meeting Friday is an opportunity for us to visit with the president about how we can all keep our commitment to reduce Washington spending,” said McConnell.

“We can either secure those reductions more intelligently, or we can do it the President’s way with across-the board cuts,” he said, reiterating the Republican refusal to raise new revenues by closing tax loopholes.

Wrangling between Obama and Republicans on an alternative way to trim the deficit has stalled attempts to subvert the sequester.

The painful, automatic budget cuts were envisioned as a mechanism to defuse a previous spending showdown by forcing both sides into a deal to cut the deficit, but Washington is so dysfunctional that no agreement has been reached.

Republicans blame Obama for the sequester, saying it was his idea, though the White House points out that Republicans in the House and Senate voted for the measure before the president signed it into law.

The White House has warned of a “perfect storm” of widespread furloughs, nationwide airport delays and weaker US border security. It says US military readiness will be hurt and public and emergency services curtailed.

Education Secretary Arne Duncan told reporters that some teachers could get furloughed and government subsidies for education for poor children and those with special needs could be hit.

“Kids are going to get hurt, that’s just the reality,” Duncan said, as he became the latest cabinet secretary to address the impact of the sequester in a White House public relations offensive.

There was little sign on Wednesday of real efforts to halt the sequester.

Several bills are being readied for the floor in Congress, though the measures were more political theatrics than a genuine bid to halt the cuts.

Democrats are working on what Reid called a “balanced” bill that would close many tax loopholes to raise revenues and make targeted spending cuts. The measure is not expected to pass, however.

Republicans are working on several approaches — one of which would give Obama authority to mitigate the arbitrary nature of the cuts and to choose where to slice the budget.

The White House however has said such an approach is unworkable and some senior Republicans are suspicious of handing more power to the White House.

New York Mayor Michael Bloomberg, who was at the White House to discuss gun control efforts, condemned posturing in Washington, but said the impact of the sequester would not be immediately felt.

“In all fairness, on Monday we’ll be able to police the streets. There will be a fire engine that responds, an ambulance, our teachers will be in front of the classroom. If there’s snow, we’ll be able to plow,” he said.

“It’s something that takes a while to implement.”

Source: AFP

By vivian