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Wednesday September 2nd, 2015 10:31PM

Obama warns sequester will cause job losses

By The Associated Press
WASHINGTON - Staking out his ground ahead of a fiscal deadline, President Barack Obama lashed out against Republicans, saying they are unwilling to raise taxes to reduce deficits and warning that the jobs of essential government workers, from teachers to emergency responders, are on the line.

Obama spoke as a March 1 deadline for automatic across-the-board spending cuts approached and with Republicans and Democrats in an apparent stalemate over how to avoid them.

Obama cautioned that if the $85 billion in immediate cuts - known as the sequester - occur, the full range of government would feel the effects. Among those he listed: furloughed FBI agents, reductions in spending for communities to pay police and fire personnel and teachers, and decreased ability to respond to threats around the world.

He said the consequences would be felt across the economy.

"People will lose their jobs," he said. "The unemployment rate might tick up again."

"So far at least, the ideas that the Republicans have proposed ask nothing of the wealthiest Americans or the biggest corporations," Obama said. "So the burden is all on the first responders, or seniors or middle class families."

House Republicans have proposed an alternative to the immediate cuts, targeting some spending and extending some of the reductions over a longer period of time. They also have said they are willing to undertake changes in the tax code and eliminate loopholes and tax subsidies. But they have said they would overhaul the tax system to reduce rates, not to raise revenue. Obama did win an increase at the start of the year when Congress increased the upper tax rate for the wealthiest Americans.

"The American people understand that the revenue debate is now closed," House Speaker John Boehner said in a statement Tuesday following Obama's remarks. "Tax reform is a once-in-a generation opportunity to boost job creation in America. It should not be squandered to enable more Washington spending. Spending is the problem, spending must be the focus."

Obama's remarks came a day after he returned to Washington from a three-day golfing weekend in Florida.

Congress is not in session this week, meaning no votes will occur before next week and complicating the ability to negotiate any short-term resolution.

Obama said the anticipated cuts were already having an effect, noting that the Navy had already delayed the deployment of a carrier to the Persian Gulf.

"Changes like this - not well thought through, not phased in properly - changes like this effect our ability to respond to threats in unstable parts of the world," he said.

Obama wants to offset the immediate spending cuts, known as a sequestration in budget language, through a combination of targeted spending cuts and increased tax revenue. The White House is backing a proposal unveiled last week by Senate Democrats that is in line with the president's principles.

But that plan has met an icy reception among Republicans, who oppose raising taxes to offset the cuts. GOP leaders say the president got the tax increases he wanted at the beginning of the year when Congress agreed to raise taxes on family income above $450,000 a year.

Obama called on congressional Republicans to compromise and accept the Senate Democrats' proposal.

The Democrats propose to generate revenue by plugging some tax loopholes. Those include tax breaks for the oil and natural gas industry and businesses that have sent jobs overseas, and by taxing millionaires at a rate of at least 30 percent.

A spokesman for House Speaker John Boehner said the Ohio Republican agrees the sequester is a bad way to reduce spending, but put the onus for averting the cuts on Democrats.

"A solution now requires the Senate - controlled by the president's party - to finally pass a plan of their own," spokesman Brendan Buck said.

Meanwhile, a bipartisan proposal Tuesday by co-chairs of an influential deficit-reduction commission called for reducing the deficit by $2.4 trillion over the next 10 years, with much of the savings coming through health care reform, closing tax loopholes, a stingier adjustment of Social Security's cost of living increases and other measures.

The proposal by former Republican Sen. Alan Simpson of Wyoming and Democrat Erskine Bowles, the former chief of staff for President Bill Clinton, calls for about one quarter of the savings to come from changes in health care programs and another quarter from revenue generated by tax changes.

In their plan, Bowles and Simpson say the automatic cuts scheduled for March 1 are too steep and could set back the economy.

"Sharp austerity could have the opposite effect by tempering the still fragile economic recovery. In order to protect the recovery, the sequester should be avoided and deficit reduction should be phased in gradually," they wrote.

Some Republicans, including House Budget Committee Chairman Paul Ryan, R-Wis., have advocated plugging loopholes, but as part of a discussion on a tax overhaul, not sequestration.

"Loopholes are necessary for tax reform," Ryan said Sunday on ABC's "This Week." `'If you take them for spending, you're blocking tax reform and you're really not getting the deficit under control."

The sequester was first set to begin taking effect on Jan. 1. But as part of the "fiscal cliff" negotiations, the White House and lawmakers agreed to push it off for two months in order to create space to work on a larger budget deal.

With little progress on that front in recent weeks, Obama is calling for the sequester to be put off again, though it's unclear whether another delay would have any impact on the prospects for a broader budget agreement.
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