President Barack Obama told the press Monday afternoon that congressional leaders were approaching a deal to halt an automatic tax increase with the expiration of the Bush tax cuts on New Year’s Day.
But, he said, there was nothing yet in place to stop a slate of automatic, aggressive cuts to defense spending and other key programs–and wouldn’t be, unless Republicans agreed to yet more revenue increases.
In a rare public acknowledgement of sequestration–a plan that reportedly originated in the White House last year as an ultimatum to motivate Congress toward a deficit deal–Obama said the $1 trillion package of defense and domestic spending reductions “may not always be the smartest cuts.”
“We’re using an axe instead of a scalpel,” Obama said.
The deal reportedly under negotiation in Congress to stop the automatic tax rate increase would raise revenues on individuals making $400,000 or more, and families making $450,000 or more, netting some $600 billion in revenue over the next ten years. Though Obama has repeatedly emphasized the need to balance revenue and spending cuts, that agreement is almost entirely revenue-based.
And Obama doubled down again on his refusal to countenance any alternative to sequestration that didn’t raise more revenue.
“Any agreement to deal with these automatic spending cuts, those also have to be balanced,” he said. “Revenues have to be part of the equation in turning off the sequester.”
The immediate priority for the White House and Congress, Obama said, was to continue negotiating tax cuts, implying that the dreaded sequestration cuts will tax effect, and any deal to stop them will come after that fact.
The Defense Department has already released guidance notifying employees that they may be forced to take furloughs if the cuts continue further into the New Year.
“If Republicans think that I will finish the job of deficit reduction through spending cuts alone…that will hurt seniors or hurt students or hurt middle class families without asking an equivalent sacrifice from millionaires or companies with a lot of lobbyist or whatever, if that’s how they think we’re going to do this thing, they’ve got another thing coming,” Obama said.