WASHINGTON, March 1, 2013 -- President Obama and congressional leaders today failed to reach a breakthrough to avert a sweeping package of automatic spending cuts, setting into motion $85 billion of across-the-board belt-tightening that neither had wanted to see.
President Obama officially initiated the cuts with an order to agencies Friday evening.
He had met for just over an hour at the White House Friday morning with Republican leaders House Speaker John Boehner and Senate Minority Leader Mitch McConnell and his Democratic allies, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Vice President Joe Biden.
But the parties emerged from their first face-to-face meeting of the year resigned to see the cuts take hold at midnight.
"This is not a win for anybody," Obama lamented in a statement to reporters after the meeting. "This is a loss for the American people."
Officials have said the spending reductions immediately take effect Saturday but that the pain from reduced government services and furloughs of tens of thousands of federal employees would be felt gradually in the weeks ahead.
Federal agencies, including Homeland Security, the Pentagon, Internal Revenue Service and the Department of Education, have all prepared to notify employees that they will have to take one unpaid day off per week through the end of the year.
The staffing trims could slow many government services, including airport screenings, air traffic control, and law enforcement investigations and prosecutions. Spending on education programs and health services for low-income families will also get clipped.
"It is absolutely true that this is not going to precipitate the crisis" that would have been caused by the so-called fiscal cliff, Obama said. "But people are going to be hurt. The economy will not grow as quickly as it would have. Unemployment will not go down as quickly as it would have. And there are lives behind that. And it's real."
The sticking point in the debate over the automatic cuts -- known as sequester -- has remained the same between the parties for more than a year since the cuts were first proposed: whether to include more new tax revenue in a broad deficit reduction plan.
The White House insists there must be higher tax revenue, through elimination of tax loopholes and deductions that benefit wealthier Americans and corporations. Republicans seek an approach of spending cuts only, with an emphasis on entitlement programs. It's a deep divide that both sides have proven unable to bridge.
"This discussion about revenue, in my view, is over," Boehner told reporters after the meeting. "It's about taking on the spending problem here in Washington."
Boehner says any elimination of tax loopholes or deductions should be part of a broader tax code overhaul aimed at lowering rates overall, not to offset spending cuts in the sequester.
Obama countered today that he's willing to "take on the problem where it exists, on entitlements, and do some things that my own party doesn't like."
But he says Republicans must be willing to eliminate some tax loopholes as part of a deal.
"They refuse to budge on closing a single wasteful loophole to help reduce the deficit," Obama said. "We can and must replace these cuts with a more balanced approach that asks something from everybody."
Can anything more be done by either side to reach a middle ground?
The president today claimed he's done all he can. "I am not a dictator, I'm the president," Obama said.
"This idea that somehow there's a secret formula or secret sauce to get Speaker Boehner or Mitch McConnell to say, 'You know what, Mr. President, you're right; we should close some tax loopholes for the well-off and well-connected, in exchange for some serious entitlement reform and spending cuts in programs we don't need' -- you know, I think if there was a secret way to do that, I would have tried it," he said. "I would have done it."
Meanwhile, another deadline looms on the horizon: how to fund the federal government after March 27, or face a shutdown.
Both sides pledged to move ahead next week with plans to avert that possibility, even as the gridlock over the automatic spending cuts still stands.
"I'm hopeful that we won't have to deal with the threat of a government shutdown while we're dealing with the sequester at the same time," Boehner said.
"The House will act next week, and I hope the Senate will follow suit."