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President Obama said, “The pain, though, will be real.”

,

what’s at stake

Overall: $85 billion in federal spending cuts.

In Minnesota:

Jobs: minus 16,033

Gross state product: minus $1.6 billion

State budget: minus $117 million to programs

Federal funding: minus 1 percent to Minnesota

Defense contractors: minus $349 million

Maternal and child health services: cuts to food assistance and health care

Education: minus $34 million for programs

Job training: 20,795 fewer people served

Spending cuts roll out, with no end in sight

  • Article by: MICHAEL D. SHEAR and JONATHAN WEISMAN New York Times
  • March 2, 2013 - 8:36 AM

 

– President Obama and congressional leaders failed Friday to stop deep, automatic cuts in federal spending that will immediately shrink the size and ambition of government, even as they vowed an end to the rolling fiscal battles that have repeatedly threatened government shutdowns and economic crisis over two years.

The fruitless talks mean that deep federal budget cuts are here with no end in sight. Emerging from an Oval Office meeting with the lawmakers after a final attempt to final common ground, the president called the cuts “just dumb.” He said they would slow the economic recovery and spoke emotionally about their impact on people who would feel the consequences of government layoffs and disruptions in public services.

“I don’t anticipate a huge financial crisis, but people are going to be hurt,” said the president, who acknowledged that his campaign of highlighting fallout from the cuts had failed to persuade Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.

But both Obama and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.

The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion.

Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion.

After locking in nearly $3.6 trillion in spending cuts and tax increases since 2011, the receding budget wars have left their mark on the nation’s balance sheet, said Alice Rivlin, a former White House budget director and former vice chairwoman of the Federal Reserve. But, she said, those successive budget deals have done nothing to address the nation’s long-term financial troubles as the population ages. They have, however, hurt the economy.

“It does not get us on a track to stabilizing the debt, mostly because it’s the wrong kind of cut,” Rivlin said. “No, it makes things worse.”

No ‘back-room’ deal

The two parties will now move to a broader argument over the right level of taxes and spending as they seek to develop a new budget for the coming year and beyond. Republicans said they welcomed a return to a more orderly budget process but warned they would not give in on their basic principles.

“I will not be part of any back-room deal, and I will absolutely not agree to increase taxes,” said Sen. Mitch McConnell of Kentucky, the Republican leader.

After a public relations blitz lasting weeks that was aimed at stopping the cuts, Obama said he is prepared to extend a stopgap law that finances the government to March 27, a decision that most likely allows the across-the-board spending reductions to remain in place for months if not years.

White House officials and Senate Democrats had considered making one last stand around the March 27 deadline, declaring the Senate would not pass another government spending plan unless it undid the across-the-board cuts. But Senate Democrats were leery. The first furloughs are likely to hit in April, and the Democrats feared that little political pressure would have built on Republicans before the expiration of the current stopgap spending law.

“The president has made it clear he does not want to shut down the government,” said Sen. Patty Murray of Washington, the Senate Budget Committee chairwoman, on Friday. “None of us do. That is another disruption that we just can’t afford right now.”

After the White House session, House Speaker John Boehner, R-Ohio, said that he wanted to avoid a shutdown and that the House would begin advancing a financing measure next week.

“I’m hopeful that we won’t have to deal with the threat of a government shutdown while we’re dealing with the sequester at the same time,” he told reporters.

Republicans told the president during Friday’s meeting that they would not accept any new tax increases as an alternative to the across-the-board cuts, known as the sequester, and Obama said he did not intend to force the issue.

“Until Congress takes the sequester away, we’d have to abide by those additional cuts,” Obama conceded. “But there’s no reason why we should have another crisis by shutting the government down in addition to these arbitrary spending cuts.”

At the Pentagon, the new defense secretary, Chuck Hagel, took a conciliatory tone, stepping away from the dire predictions of disruption that have emanated from the Defense Department for months.

“Today America has the best fighting force in the world, capable of responding to any challenge,” Hagel said. “This unnecessary budget crisis makes that job much harder. But we will continue to ensure America’s security.”

‘Where we can make progress’

For Republicans, who lost a battle with the president over raising taxes at the end of last year, the agreement probably enshrines the lower levels of government spending for the remainder of the fiscal year, which ends Sept. 30. And it gives Boehner a victory to crow about with his increasingly conservative members.

But the president will probably benefit from the cold peace, too. He said he was ready to move beyond the repeated fiscal debates in the past several years to the broader agenda he spelled out in the State of the Union address, including gun control measures, universal preschool, a higher minimum wage, an immigration overhaul and changes to the nation’s system of voting.

“We can’t let political gridlock around the budget stand in the way of other areas where we can make progress,” Obama said.

In that sense, the White House meeting on Friday signaled a new political order after the deep divisions brought on by the Tea Party wave of 2010. The meeting was subdued, according to aides, with none of the tension of last November and December, when the president was locked away with Boehner, trying to head off huge automatic tax increases. Much of the session was devoted to the prosaic issue of keeping the government financed.

All that appears left to do in the short run may be a modest measure to give the Obama administration more discretion over how to mete out the cuts. That effort is already underway, led by Sens. Mark Udall, D-Colo., and Susan Collins, R-Maine.

A “regular order” process to finance the government through 2014 will start quickly. The House Appropriations Committee will unveil legislation on Monday to cover spending through Sept. 30 at post-sequestration levels, with detailed spending instructions for the military to loosen some of the current spending strictures. That measure is expected to pass the House by Thursday, and lawmakers from both parties indicated they expected a quick resolution with the Senate.

By mid-March, Murray and her House Budget Committee counterpart, Rep. Paul Ryan, R-Wis., will produce broad blueprints for spending and tax policy over 10 years, the next vehicles for bipartisanship on the deficit — if those budget plans can be reconciled.

That is doubtful. Ryan has said his plan will try to balance the budget within 10 years, without raising taxes and without any abrupt hits to Social Security and Medicare. The Ryan plan will lock in the savings from the across-the-board cuts but will shift the targets away from defense.

In contrast, Murray said, the Senate plan will undo the cuts beyond this fiscal year with a mix of tax increases and other spending reductions.

 

The Washington Post contributed to this report.

 

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