The White House has stepped up its campaign to force Republicans to renegotiate deep budget cuts due to be enforced at the end of the week, by detailing their impact on all 50 states.
President Barack Obama was due to address state governors in Washington last night, and key Democratic governors were deployed across the political talk shows to press their case. “The effects will be significant, and people will feel them,” Governor John Hickenlooper of Colorado said on CBS. The required cuts “could put us right back where we were [in recession],” said Jack Markell of Delaware on Fox News. The cuts would have “a real big impact on the economy and jobs”.
Republicans have not relented on “sequestration” – automatic across-the-board cuts to defence and discretionary spending worth $1.2 trillion over a decade.
Though the cuts will be phased in, the impact will be felt soon after the Friday start date, with the administration warning of delays at airports and cuts in jobless benefits and government services.
The US long-term jobless will be among the earliest to be hit by automatic spending cuts if they take effect. Benefit payments will be cut up to 9.4 per cent. About 3.8 million people who have been unemployed for more than six months receive emergency federal benefits worth about $300 a week on average. Under budget sequestration that assistance will be cut by about $30 a week.
Tax loopholes
The White House is demanding that the $1.2 trillion deficit reduction be renegotiated to include revenue-raising measures such as closing tax loopholes. Republicans insist that the 2011 deal on sequestration was for spending cuts alone.
The slow unfolding of the cuts has robbed the latest stand-off of the drama and brinkmanship that has characterised the multiple clashes over the deficit between the White House and Republicans in the past two years. But the cuts, unless unwound, threaten to undermine the fragile economic recovery at the start of Mr Obama’s second term and his ability to pursue other reforms.
Mr Obama and his supporters are attempting to use his extensive grassroots base to put pressure on Republicans to return to the negotiating table, so far with little discernible effect.
– (Copyright The Financial Times Limited 2013)
