WASHINGTON DC, USA - President Barack Obama was scheduled to travel to a Virginia shipyard to press his argument that looming spending cuts could hurt military readiness yesterday, while Republicans are criticising him for taking his argument outside Washington instead of staying to resolve a political standoff that experts believe is already slowing the fragile US economy.
With just three days to go, there was no indication the White House and congressional Republicans were actively negotiating a deficit-reduction agreement needed to prevent US$85 billion in automatic budget cuts set to begin taking effect Friday. Obama wants any deal to include both targeted cuts and tax increases, while Republican congressional leaders insist that that any further deficit reduction should come from reduced spending alone.
The latest Associated Press Economy Survey of 37 economists found that most believe the budget impasse is already dragging down the economy even more than any reluctance by Americans to spend freely. They worry that the budget fights in Washington will persist for much of 2013 and hinder growth.
Obama planned to appear at Virginia's largest industrial employer, Newport News Shipbuilding, to stress that the spending cuts will idle military resources like naval aircraft carriers. The president warned Monday that if cuts to naval spending take effect, the company's "workers will sit idle when they should be repairing ships, and a carrier sits idle when it should be deploying to the Persian Gulf."
Testifying before a House subcommittee yesterday, US military leaders urged Congress to act swiftly to stop the reductions. Members of the Joint Chiefs of Staff described how national security would be put at risk if they are forced to make deep decreases in spending for personnel, training, and equipment modernization programs. The Pentagon faces a US$46 billion budget reduction through the end of September, and billions of dollars in additional cuts would come in future years as long as the budget-cutting mechanism, known as sequester, remains in effect.
The White House has warned that the cuts could affect everything from commercial flights to classrooms to meat inspections and lead to furloughs for hundreds of thousands of workers.
Despite the grim predictions, there is some breathing room for political settlement even if Friday's deadline comes and goes: Provisions are in place to preserve the most crucial services and furloughs of federal workers are at least a month away.
In the meantime, both sides seem intent on blaming each other than coming up with a deal.
Obama's speech in Virginia was unlikely to persuade Republicans to make major concessions ahead of Friday's deadline. But by speaking in a Republican congressional district and a politically important state, Obama is making the case that if painful cuts do occur, Republicans should be held responsible.
Republicans are making similar arguments, accusing Obama of failing to propose serious spending cutbacks. Some congressional leaders have recently indicated their willingness to let the severe automatic cuts take effect and stay in place for weeks, if not longer.
Rep Cathy McMorris Rodgers, chair of the House Republican Conference, criticised Obama for traveling to southern Virginia rather than up the street to Capitol Hill to come up with a solution.
"We need the president to stop campaigning for higher taxes, come back here to Washington, DC, and lead," McMorris Rodgers said during a press conference Monday with Republican congressional leaders.
The automatic budget cuts were designed to be so unattractive and damaging that they would force Congress and the Obama administration to find a better way to address the country's massive deficit. They was meant to take effect only if a congressional super-committee failed to come up with at least US$1 trillion in savings from benefit programs.
A deal reached at the start of the year pushed back the implementation of the automatic spending cuts to March 1, but both sides remain far apart.
Obama insists higher revenue must be part of a deal and is proposing closing tax loopholes that benefit the wealthiest Americans and corporations. Republicans say the legislation passed in January already raises taxes on the rich to generate an estimated US$600 billion for the Treasury over a decade.
The administration is pointing to the impact of the cuts on Newport News Shipbuilding, which builds and maintains the Navy's nuclear-powered aircraft carriers as well as other warships. The Navy has already delayed a long-planned complex overhaul of the carrier USS Abraham Lincoln at the shipyard as a result of the budget uncertainty, and other plans call for delaying the construction of other ships.
The White House says about 90,000 civilians working for the Defense Department in Virginia would be furloughed for a cut of nearly US$650 million in gross pay. The White House also says the sequester would cancel maintenance of 11 ships in Norfolk.
Republican Sen. Lindsey Graham offered a potential way out of the stalemate Monday by indicating he was open to raising tax revenue if Obama offered to overhaul big ticket entitlement programs.
"I'll raise revenue. Will you reform entitlements?" Graham said in a challenge to the president on CNN. "And both together, we'll set aside sequestration in a way that won't disrupt the economy and hurt the Defense Department."