Obama spending cuts strategy focused on waiting game

WASHINGTON Tue Feb 26, 2013 5:21am IST

U.S. President Barack Obama gestures as he speaks to the National Governors Association in the State Dining Room of the White House in Washington February 25, 2013. REUTERS/Kevin Lamarque

U.S. President Barack Obama gestures as he speaks to the National Governors Association in the State Dining Room of the White House in Washington February 25, 2013.

Credit: Reuters/Kevin Lamarque

Related Topics

WASHINGTON (Reuters) - The White House, while advancing an aggressive public relations campaign to highlight the damaging effects of $85 billion in automatic spending cuts, is largely resigned to the fact that they will go into effect on Friday.

With no deal expected in the few days remaining until the cuts kick in, President Barack Obama is pursuing a strategy aimed at generating outrage among Americans that he hopes will force Republicans to come to the negotiating table and agree to his demand for higher taxes after the cuts go into place.

The White House is well aware that Republicans need a victory for their conservative supporters after they reluctantly agreed to income tax increases for the wealthy at the end of last year.

Officials reason that standing up to the president now and ushering in across-the-board spending cuts, no matter how onerous, would allow Republicans to show the conservative Tea Party movement and other right-leaning supporters that they were not steamrolled into raising tax revenues again.

Once that "victory" is achieved and the cuts go into effect on March 1, officials hope real talks can begin in earnest to turn them off and agree on a wider deal.

"I think it's put Republicans on notice that if they don't act, they're going to own this, pure and simple," said Democratic strategist Bud Jackson.

It is the latest step in yet another Washington budget showdown as Obama seeks to use the political clout he feels he earned by winning re-election in November to push forward proposals aimed at improving the plight of the middle class.

The president has an aggressive agenda that includes tighter gun control measures and an immigration overhaul, but he must deal first with a budget morass that was partly of his own making.

The White House and Republicans in 2011 came up with the idea for the automatic spending cuts, known as the "sequester," designing them to be so draconian that no one would ever let them take place.

Now that they are about to become a reality, top government officials have warned of dire results such as long security lines at airports and insufficiently guarded borders as a way of preparing Americans for what to expect and, more strategically, to encourage them to complain to their lawmakers in Congress.

The White House says it has little flexibility in determining where the cuts will take place, rejecting claims from Republicans that the president could make trims that would be less economically damaging. "You can't change the fact that the impact will be heavy," said White House spokesman Jay Carney.

The risk of this strategy, experts say, is that the public may not perceive the cuts to be as bad as advertised and fails to get outraged.

"It's a legitimate tactic," said David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University. "The danger is if the sequester goes into effect and the sky doesn't fall, people will say we're getting along fine."

Republicans are not budging on Obama's insistence that tax revenues be included in a short- or long-term deal, and Democrats are unwilling to accept the view of many Republicans that spending cuts alone can be used to tackle the budget deficit.

So a standstill has devolved into a game of waiting out the other side, and both sides seem to have accepted that means the cuts are inevitable.

There has been no substantive contact between Obama and Republican leaders of Congress since the last fiscal crisis at the end of 2012, when Republicans accepted higher taxes on the wealthy.

"Reaching a deadline and passing a deadline sometimes then produces increased pressure on the parties to come to a deal," said one Democratic strategist.

"There's time after the clock runs out, and I just think both sides are keenly aware of that, too," he said.

Obama himself has indicated he is hopeful a deal can be reached before March 1.

"Hope springs eternal," he said during a meeting with the prime minister of Japan last Friday, when asked in the Oval Office about the possibility of averting the cuts.

But the reality is that the cuts are almost certain to take effect, at least for a few weeks, until serious negotiations get started. (Editing by Fred Barbash, Martin Howell, Doina Chiacu)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage