Congress urged to avert looming budget cut

WASHINGTON Wed Aug 1, 2012 8:28pm EDT

OMB's Deputy Director for Management Jeff Zients waits to talk about the White House's budget negotiations with Capitol Hill at the White House in Washington April 7, 2011. REUTERS/Larry Downing

OMB's Deputy Director for Management Jeff Zients waits to talk about the White House's budget negotiations with Capitol Hill at the White House in Washington April 7, 2011.

Credit: Reuters/Larry Downing

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WASHINGTON (Reuters) - Congress should stop fretting over the mechanics of implementing a huge, indiscriminate budget cut early next year and instead try to pass a more reasonable plan to reduce deficits, a senior U.S. official told lawmakers on Wednesday.

In a hearing punctuated by partisan anger, acting White House budget director Jeff Zients rejected assertions that President Barack Obama was responsible for the stalemate over the looming budget cuts.

Zients said the problem was Republicans' reluctance to consider higher taxes on the wealthiest Americans.

Pressed by Republican Representative Randy Forbes over whether the president had "some responsibility to put forward a realistic proposal" to avert the cuts, Zients shot back, "What's holding us up right now is the Republican refusal to have the top 2 percent pay their fair share."

Zients told members of the House of Representatives Armed Services Committee the cuts due to kick in on January 2 would be devastating for both defense and non-defense programs, causing 16,000 teachers and aides to lose their jobs and eliminating early childhood education for 100,000 youngsters.

Deputy Defense Secretary Ashton Carter, who testified alongside Zients, said the reductions would force the Pentagon to cut back on the planes it is planning to buy and delay ship construction, moves that will ultimately cause costs to rise.

Addressing Republican concerns about the administration's failure to begin planning for the reductions, Zients told lawmakers: "We will be ready (to implement the cuts), but really that's not where the energy should be spent. The energy should be spent on passing balanced deficit reduction to avoid what everybody agrees is bad policy.

"The right course is not to spend time moving rocks at the bottom of the cliff to make for a less painful landing. The right course is to avoid driving off the cliff altogether," he said.

Under the Budget Control Act signed last August, Congress cut spending by about $917 billion over the next decade, with $487 billion coming from national security.

The act also established a congressional panel to find $1.2 trillion in additional spending reductions by the end of the year. Under the law, if the committee failed to reach an accord, $1.2 trillion in across-the-board cuts would go into force in early 2013 under a mechanism known as sequestration.

The committee was unable to reach a deal and the cuts are due to go into effect January 2, including $500 billion in additional reductions to the defense budget.

Defense Secretary Leon Panetta and other Pentagon officials have warned that the cuts would be devastating to the military, undermining its ability to implement a newly designed strategy that shifts U.S. focus to the Asia-Pacific region.

Lawmakers on the House committee have expressed increasing concern about the looming cuts. The Pentagon has said it was not planning how to implement the reductions because it had not been directed to do so by the White House budget office.

That prompted Representative Buck McKeon to ask Zients to testify before the Armed Services Committee. Zients initially declined an informal request to appear before the panel but later agreed to do so after McKeon pressed the issue with a formal invitation letter.

Zients said the Office of Management and Budget issued guidance earlier this week to begin preparing federal agencies to comply with sequestration.

He said he had notified Congress that the president would exempt military personnel accounts from the effects of the budget reduction. And the Labor Department had advised employers they would not be required to notify workers 60 days ahead of time about potential layoffs that might result from the cuts.

"We are taking the necessary steps," Zients said. "But ... no amount of planning will mitigate the damaging effects of sequestration. Sequestration is a blunt, indiscriminate instrument designed to force action, to force Congress to act."

McKeon expressed disappointment after the hearing that Zients had taken a finger-pointing "partisan" stance about resolving the deadlock over the cuts, saying "it was not something that we're used to in our committee."

Representative Adam Smith, the panel's top Democrat, said committee members are usually very partisan but their witnesses are from the Pentagon and "don't really fight back."

"Today we finally had someone who was willing to punch back," Smith said.

(Editing by Warren Strobel, Vicki Allen and Kenneth Barry)

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Comments (2)
Abulafiah wrote:
This is not a real problem, at least not for the USA.

All Obama needs to do is let it all happen, and then, next January present a bill to increase defence spending to a sensible level, and another to cut taxes on the middle class.

Politically, he would win in a big way. The GOP would have a choice of opposing tax cuts and increased defence spending, or of supporting Obama.

Aug 02, 2012 4:27am EDT  --  Report as abuse
justinolcb wrote:
he wont be in office next January

Aug 02, 2012 10:36am EDT  --  Report as abuse
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