W.House tells Congress to focus on cutting deficit

WASHINGTON, June 25 Tue Jun 26, 2012 3:11am IST

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WASHINGTON, June 25 (Reuters) - The White House on Monday urged U.S. lawmakers to focus on enacting measures to cut federal deficits rather than holding hearings on the effect of $1.2 trillion in automatic spending cuts due to start on Jan. 2.

U.S. House Armed Services Committee Chairman Buck McKeon said in an editorial published by Politico that it was "deeply discouraging" that the president's budget director had refused to testify at a mid-July hearing on the projected impact of the mandatory budget cuts under a process called sequestration.

McKeon called on Democrats and President Barack Obama to "do their part" and offer more than "vague talking points" to avert the mandatory cuts, which could result in the loss of 1 million jobs in 2013 and 2014, according to several reports.

Ken Baer, communications director for the White House Office of Management and Budget, countered the comments by the Republican lawmaker, noting that Congress knew all along that sequestration would hurt both defense and non-defense programs.

"Instead of holding a hearing about how to mitigate the effects of a destructive sequester, right now is the time for Congress to enact bipartisan, balanced deficit reduction legislation that the President can sign into law and avoid the sequestration scheduled to take place on January 2, 2013," Baer said in an emailed statement.

Lockheed Martin Corp, the Pentagon's largest supplier, last week said it could face hundreds of millions of dollars in business claims from suppliers if $500 billion in additional defense spending cuts take effect in January.

Lockheed and other big weapons makers say uncertainty about the cuts, which would come on top of $487 billion in cuts already being implemented, could lead to extensive layoffs, closings of facilities and an erosion of quality.

The National Association of Manufacturers released a new report which said the automatic budget cuts would knock about 1 percent off U.S. gross domestic product by 2014.

Baer said OMB would be prepared if Congress was unable to avert the additional cuts, which would include about $500 billion for defense over the next decade as well as over $600 billion in cuts to healthcare and other government programs.

"While OMB has not yet engaged agencies in planning, our staff is conducting the analysis necessary to move forward if necessary," he said.

The issue is gaining increasing attention in Congress, which makes some lawmakers optimistic that the cuts may be averted.

Three Republican members of the Senate Armed Services Committee, including Senator John McCain, last week called for immediate action to avert sequestration.

McCain, the senior Republican on the committee, told a defense conference hosted by Bloomberg Government on Thursday, that a revenue increase may be possible to avoid the further budget cuts. He said a previous proposal to reduce spending and raise revenue "could serve as a blueprint for further action."

The second round of defense cuts was included in a budget deal last year between Congress and Obama. The cuts were believed to be so extreme they would encourage rival Republicans and Democrats to compromise on alternative ways to reduce the country's trillion-dollar budget deficits.

But that plan failed and lawmakers did not reach a compromise late last year, triggering across-the-board cuts to take effect on Jan. 2. Lockheed and other companies say they will have to start notifying workers about possible job cuts at their plants as early as October.

The Pentagon has requested $525 billion in defense spending for the 2013 fiscal year beginning in October. The request was about $6 billion less than 2012, a drop for the first time after a decade of rising military spending. The budget was the first to reflect the initial round of spending reductions.

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