2012-09-14 22:55:40 UTC
Sept. 14 (Bloomberg) -- The Obama administration, in a politically
charged report released less than two months before the election,
catalogued $1.2 trillion in looming spending cuts that it said would
be devastating to federal programs.
The White House Office of Management and Budget said in the report to
Congress today that it would have to chop $109 billion from the budget
in fiscal 2013, split evenly with $54.7 billion coming from defense
and $54.7 billion from programs outside defense. It includes an $11
billion cut, or 2 percent, from Medicare, that would fall on
Spending cuts would undermine economic investment, and cause severe
harm by reducing food-safety inspections, air traffic controllers,
medical research and support for schools, the report said. It also
would force the Pentagon to juggle accounts to maintain current
war-fighting capabilities and delay repairing or buying new equipment.
Taxes, spending and the federal budget deficit are among the central
issues in the election contest between President Barack Obama and
Republican Mitt Romney. Obama is pressing to raise taxes on the
wealthiest Americans to help pay for government programs. Romney
argues that doing so would hit small businesses and hurt job creation
at a time when the unemployment rate has been above eight percent for
The deficit this year is projected to reach $1.1 trillion, which would
make it the fourth consecutive year the government has run
trillion-dollar shortfalls. That has contributed to a recent run-up in
the federal debt, which has climbed more than 75 percent in the past
At $11.3 trillion, or 73 percent of the nations gross domestic
product, the publicly held debt this year is projected to reach the
highest level since shortly after World War II. Moodys Investors
Service warned earlier this week it may join Standard & Poors in
downgrading the U.S.s credit rating if lawmakers dont agree next
year on a deficit-reduction plan.
Obamas budget advisers, in the almost 400-page report, said the
reductions would affect more than 1,200 budget accounts and blamed
Republicans in Congress for focusing strictly on spending cuts.
The budget resolutions put forward by House Republicans represent
particularly irresponsible approaches to addressing sequestration by
refusing to raise taxes for the top 2 percent of earners, the report
These proposals would shift the burden of deficit reduction onto the
middle-class and vulnerable populations and represent the wrong
choices for the nations long-term growth and prosperity, it said.
House Republicans endorsed a plan in May that would replace much of
next years cuts with savings carved out of food stamps, Medicaid,
federal workers benefits, the Consumer Financial Protection Bureau
and other spending programs. They would allow some of the scheduled
cuts to take effect, such as the 2 percent reduction in Medicare.
The budget office said the calculations were preliminary and subject
to change. Even so, the report said theres no question that paring
the budget to this degree would be deeply destructive to national
security, domestic investments and core government functions.
For example, the Federal Aviation Administrations 2013 budget would
be cut by $1 billion, according to the report. That would force the
agency to reduce service at some airports and may cause a drop in
airline travel of as much as 10 percent, according to a study released
last month by the Aerospace Industries Association, an Arlington,
Virginia-based trade group.
The $21.3 billion aircraft procurement request from the Air Force
would be cut $2 billion, hitting top aircraft and electronics makers
Lockheed Martin Corp., Boeing Co., Northrop Grumman Corp., Raytheon
Co. and L-3 Communications Holdings Inc.
Similarly, the Navys $22.7 billion Shipbuilding and Conversion
account would be cut by $2.1 billion, trims that would affect top
builders Huntington Ingalls Industries Inc. and General Dynamics Corp.
The automatic across-the-board cuts, known as sequestration would
begin on Jan. 2 unless Congress adopts an alternative and would come
each year through 2021. The sequestration is intended as a punitive
step lawmakers imposed upon themselves for failing in 2011 to
negotiate a deal to cut deficits by at least $1.2 trillion over a
Todays report, highlights the crippling effect these reductions will
have on our nations security and underscores the urgent need for the
President to work with congressional Republicans to replace these
destructive cuts, said Senate Minority Leader Mitch McConnell, a
While the law calls for $1.2 trillion in reductions over the next nine
years, the real cuts amount to $984 billion. Thats because it allows
lawmakers to chalk up 18 percent of those savings to reduced interest
payments on the debt, which todays report shows would amount to $216
The sequestration would impose a 9.4 percent cut in defense
discretionary spending, and an 8.2 percent reduction in nondefense
discretionary accounts, according to the report. Nondefense mandatory
programs would take a 7.6 percent hit and defense-related mandatory
programs would be slashed by 10 percent.
The administration, which is charged with implementing the so-called
sequester, emphasized the law gives it little discretion in
apportioning the cuts.
Personally I blame both parties for this. The Far Left and Right
won't compromise at all.