Obama to press Congress to revisit $1.2T in cuts

[January 20, 2012]  WASHINGTON (AP) -- In its budget submission next month, the Obama administration will urge lawmakers to revisit the failed attempt by a congressional supercommittee to cut the deficit by at least $1.2 trillion, the White House says.

The proposal runs counter to the common wisdom in Washington that any major deficit reduction effort is unlikely in a presidential election year. Instead, lawmakers are focusing on a one-year extension of a payroll tax cut and supplemental jobless benefits sought by the president as part of last fall's jobs agenda.

But also looming are sweeping across-the-board spending cuts required next year because of the supercommittee deadlock. Top lawmakers like House Armed Services Committee Chairman Howard "Buck" McKeon, R-Calif., are focusing on a less ambitious one-year plan to give the Pentagon a reprieve from cuts that both the administration and Republicans say would cripple the military.

The White House plan, likely to reprise new taxes and fee proposals that are nonstarters with Capitol Hill Republicans, would turn off the entire nine-year, $1.2 trillion across-the-board spending cuts, referred to as a "sequester."

"We have a sequester coming less than a year from now unless Congress acts," said a senior administration official. "We're going to ask Congress to do now what we think Congress should have done in December, which is enact more than $1.2 trillion in deficit reduction, turn off the sequester and maintain the (spending caps)."

The official required anonymity as a condition to speak to a reporter on the plan.

That plan of budget cuts would be imposed under last summer's budget and debt pact between Obama and Congress that imposed $900 billion in savings from accounts appropriated by Congress each year and promised at least $1.2 trillion more from the work on the deficit supercommittee, or, failing that, across-the-board cuts to a sweeping set of defense and domestic programs.

The threat of the across-the-board cuts was supposed to prod the panel, but it never got on track and collapsed just before Thanksgiving over intractable differences on tax increases and cuts to popular programs like Medicare.

The failure of the panel capped a long, difficult budget year in which the warring sides were only able to agree when facing either a shutdown of the government or an unthinkable default on U.S. obligations. Policymakers face the prospect of more gridlock this year as election-year politics promise to even further cripple the already limited ability of Obama and Capitol Hill Republicans to work together.

In that light, the administration's proposal could be doomed to dead-on-arrival status despite widespread desire to turn off the automatic cuts

At the same time, a new wrinkle has emerged due to the collapse of the supercommittee: a new set of spending caps for the 2013 budget year that begins Oct. 1 that require cuts of about $8 billion from the $554 billion budget for defense programs, the first outright cuts since the so-called peace dividend of the early 1990s.

The required defense cuts are separate from those that would be imposed under the sequester, but the administration official predicted lawmakers might revisit them when turning to the annual appropriations bills later this year.

The budget is slated to be released Feb. 6.

[Associated Press; By ANDREW TAYLOR]

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