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Originally published March 1, 2013 at 10:10 PM | Page modified March 1, 2013 at 10:46 PM

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Billions in automatic budget cuts kick in

As automatic budget cuts take hold, President Obama and his Republican adversaries essentially declared a cease-fire in the budget wars.

The New York Times and The Washington Post

How we got here

The sequester is the official name for the automatic federal spending cuts that began at midnight Friday and that will reduce projected spending by $85 billion over the final seven months of this fiscal year and by $1.2 trillion over the next nine years. Half the cuts will affect military spending; the remainder will be spread over other federal agencies.

The sequester was intended to be so unpleasant as to force Republicans and Democrats to compromise on reducing budget deficits, a compromise that failed to materialize.

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WASHINGTON — President Obama and congressional leaders failed Friday to stop deep, automatic cuts in federal spending that will immediately shrink the size and ambition of government, even as they vowed an end to the rolling fiscal battles that have repeatedly threatened government shutdowns and
economic crises over two years.

Emerging from an Oval Office meeting with the lawmakers, the president called the cuts “just dumb.” He said they would slow the economic recovery, and spoke about their impact on people who would feel the consequences of government layoffs and disruptions in public services.

“I don’t anticipate a huge financial crisis, but people are going to be hurt,” Obama said at a news conference at the White House. He acknowledged that his blitz of highlighting fallout from the cuts had failed to convince Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.

The short-term impact of the cuts started to emerge Friday as officials prepared for their enactment. Governors received letters from top administration officials warning about how their states would be affected by the cuts.

In Seattle, the King County Housing Authority said it had stopped issuing housing vouchers under a federal program that benefits “elderly or disabled households, veterans, and families with children.” Officials at Joint Base Lewis-McChord outlined plans to furlough civilian employees, and Seattle confronted the possibility that the Blue Angels will not fly over Lake Washington for Seafair.

But the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30,
essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.

Obama said he is prepared to extend a stopgap law that finances the government to March 27, a decision that most likely allows the across-the-board spending reductions to remain in place for months if not years.

“The president has made it clear he does not want to shut down the government,” Sen. Patty Murray of Washington, the Senate Budget Committee chairwoman, said Friday. “None of us do. That is another disruption that we just can’t afford right now.”

The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board automatic spending cuts now going into force will cut deficits an additional $1.2 trillion over that time.

Both sides indicated that for now, that may be enough — fiscal peace through political exhaustion.

The two parties will now move to a broader argument over the right level of taxes and spending as they seek to develop a new budget for the coming year and beyond. Republicans said they welcomed a return to a more orderly budget process, but warned they would not give in on their basic principles.

“I will not be part of any backroom deal, and I will absolutely not agree to increase taxes,” said Sen. Mitch McConnell of Kentucky, the Republican leader.

The sequester reductions, which Obama signed late Friday, are likely to remain in place for the foreseeable future.

The failure to reach a deal to turn off the sequester after years of clashes over spending and taxes is expected to usher in an era of deeper austerity in the U.S. To date, the country has resisted the sharp pullback in federal spending that has been more common in Europe.

The onset of the sequester will also introduce a new level of uncertainty for Americans who rely on the government for employment or services.

For Obama, the failure to reach a deal is a setback. He spent years arguing that efforts to tame the nation’s debt should involve a balance of spending cuts and tax revenues. The sequester means that balance tilts heavily toward cuts.

Polls shows Obama has broad support among Americans for his approach to taxes and spending. In coming weeks, senior administration officials said, he will highlight people and localities hurt by the sequester. The hope is that pressure will eventually force Republicans to concede, but the president said that could take months.

“It’s happening because of a choice that Republicans in Congress have made,” Obama said Friday. “They’ve allowed these cuts to happen because they refuse to budge on closing a single wasteful loophole to help reduce the deficit.”

For now, the GOP is able to say it defied the president, avoiding his demand for new tax revenue. The standoff comes after deep intraparty divisions nearly tore House Republicans apart late last year in battles about whether to support tax increases.

Republicans can say they have forced greater restraint in government spending — although it is far from the arrangement most GOP leaders wanted. Republican leaders have warned that the sequester could damage national defense and expressed frustration that it does not apply to social programs such as Medicaid and Social Security.

Nonetheless, they say the cuts are preferable to tax increases.

“Let’s make it clear that the president got his tax hikes on January 1st,” House Speaker John Boehner, R-Ohio, said after the White House meeting, referring to new taxes on the wealthy approved in January. “This discussion about revenue in my view is over. It’s about taking on the spending problem here in Washington.”

The coming months will be a test of both sides’ strategy. Obama and his aides have associated the sequester with a litany of horrors, from hundreds of thousands of job losses to steep pay cuts for border-patrol agents and the Pentagon’s 900,000 civilian employees.

“Not everyone will feel the pain of these cuts right away,” Obama said. “The pain, though, will be real.”

The stock market was unfazed, ending Friday flirting with record highs. Independent economists say the cuts are likely to slow growth and cost jobs, but the magnitude is less than in previous budget crises, such as the 2011 debt-limit battle.

The across-the-board cuts in the sequester fall on the Defense Department and domestic agencies. Some major safety-net programs, including Medicaid and food stamps, are exempt. The president and Congress created the sequester in 2011 in an attempt to force themselves to find smarter ways to reduce the deficit — they didn’t.

Material from The Associated Press is included in this report.

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