US President Barack Obama: “Washington didn’t make it easy at a time when businesses have began to get some traction”
US political leaders have left last-ditch talks at the White House without a deal to avoid steep budget cuts.
President Barack Obama blamed Republicans’ refusal to allow any tax rises for the negotiations’ failure, calling the sweeping $ 85bn (£56bn) in cuts “unnecessary” and “inexcusable”.
Congress has left for the weekend, with the spending cuts due to be written into the budget by Friday’s end.
The IMF has warned the cuts could slow global economic growth.
Analysis in the US suggests the nation’s economic output, or Gross Domestic Product (GDP), could grow by just 1.4% in 2013 if the cuts are not delayed or replaced. US GDP grew by 2.2% in 2012.
This is all about political theatre and the blame game.
So far, opinion polls suggest more Americans blame Congress and the Republicans than the president.
Neither side looks pretty. Both look as though they care more about their own ideology than the damage that will be done to the economy.
It is also a long game – there will be another budget deadline and probably a new crisis by the end of the month.
Obama’s whole strategy is to divide Republicans and paint them as intransigent wreckers.
I expected him to look for advantage, not agreement.
“Every time we get a piece of economic news… as long as the sequester is in place, we’ll know that the economic news could have been better if Congress had not failed to act,” Mr Obama said on Friday, referring to the Washington DC jargon for the budget cuts.
The US president attacked congressional Republicans for “refusing to budge” on closing any tax loopholes, arguing they were protecting tax breaks for the “well-off and well-connected”.
Mr Obama said some Republicans privately agreed with his “balanced” approach to deficit reduction that pairs spending cuts with tax rises for some Americans.
And he added some Democrats were interested in cutting spending through reforms of some government programmes.
“There’s a caucus of common sense,” he said. “It’s just a silent group right now.”
‘Spending problem’
Republican House Speaker John Boehner, meanwhile, reiterated his party’s refusal to allow taxes to rise and challenged the gridlocked US Senate to pass a bill first before the House acted on a plan.
“The American people know that Washington has a spending problem,” Mr Boehner said as he left the White House on Friday.
“Let’s make it clear that the president got his tax hikes on 1 January. The discussion about revenue, in my view, is over. It’s about taking on the spending problem.”
The BBC’s Mark Mardell in Washington says the cuts are meant to hurt – they were deliberately designed two years ago to be so brutally painful that politicians of left and right would be forced to agree on a better way of balancing the books.
The cuts are split roughly evenly between military and domestic programmes, but effects will be felt over time rather than immediately.
House Speaker John Boehner says the House will act next week on a budget bill
Next budget battle
Budget bills from both parties were defeated in the Senate on Thursday.
A Democratic plan proposing nearly $ 30bn in future cuts in defence spending and a minimum tax rate on incomes exceeding $ 1m, was blocked by Republicans.
Although Republicans and Democrats both say they want to reduce the budget deficit, estimated at $ 845bn this year, the president has accused Senate Republicans of allowing the cuts to proceed.
Where will the axe fall?
- Defence spending will take the biggest hit if the cuts go ahead, losing up to $ 46bn this year
- Social services and other agencies will not have their budgets slashed, but teachers and other employees will begin to lose their jobs as federal cash runs out
- The Federal Reserve says the cuts would also hit the overall economy, knocking half a percentage point off GDP and pushing unemployment up
- If a new temporary budget is not agreed by 27 March, some parts of the federal government may have to shut down
But Republicans contend that the president and his advisers created and proposed the idea of the cuts during budget negotiations in 2011.
The cuts are scheduled to be signed into the federal budget by President Obama by 23:59 local time on Friday (04:59 GMT on Saturday).
But now attention will also turn to the next congressional challenge – a possible shutdown of the US government if no funding bill is passed in the next month.
On 27 March a temporary federal budget that has kept the federal government running since 2012 is due to expire.
House Republicans have said they will vote on a bill next week to fund the government through the end of the fiscal year, on 30 September, but keep in place some automatic cuts taking effect on Friday.
No deal on steep US budget cuts
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