Spending cut showdown threatens Obama's second-term agenda

WASHINGTON (Reuters) - Just hours after across-the-board spending cuts officially took effect, President Barack Obama pressed Congress on Saturday to work with him on a compromise to halt a fiscal crisis that threatens the economy and his broader domestic policy agenda.

The failure by Obama and Republicans to agree to halt the $85 billion "sequester" cuts virtually guaranteed that fiscal issues would remain center stage in Washington for weeks, crowding out Obama's proposals to reform immigration, tighten gun laws and raise the minimum wage.

The economic effects of the spending cuts may take time to kick in, but political blowback has already begun and is hitting Obama as well as congressional Republicans.

A Reuters/Ipsos poll on Friday showed neither Republicans nor Obama and his fellow Democrats escaping blame.

Obama's approval rating dropped to 47 percent in a Gallup poll on Friday, down from 51 percent in the previous three-day period measured.

While most polls show voters blame Republicans primarily for the fiscal mess, Obama could see himself associated with the worst effects of sequestration like the looming furloughs of hundreds of thousands of federal workers. He signed an order on Friday night that started putting the cuts into effect.

In his weekly radio address on Saturday, Obama appealed for Republicans to work with Democrats on a deal, saying Americans were weary of seeing Washington "careen from one manufactured crisis to another."

But he offered no new ideas to resolve the recurring fiscal fights, and there was no immediate sign of any negotiations.

"There's a caucus of common sense (in Congress)," Obama said in his address. "And I'm going to keep reaching out to them to fix this for good."

At the heart of Washington's persistent fiscal showdowns is disagreement over how to slash the budget deficit and the $16 trillion national debt, bloated over the years by wars in Iraq and Afghanistan and government stimulus for the ailing economy.

The president wants to close the fiscal gap with spending cuts and tax hikes, what he calls a "balanced approach." But Republicans do not want to concede again on taxes after doing so in negotiations over the "fiscal cliff" at the end of last year.

The president offered a litany of hardships in his radio address he said would flow from the forced spending cuts.

"Beginning this week, businesses that work with the military will have to lay folks off. Communities near military bases will take a serious blow. Hundreds of thousands of Americans who serve their country - Border Patrol agents, FBI agents, civilians who work for the Defense Department - will see their wages cut and their hours reduced," he said.

'IT'S CALLED LEADERSHIP'

At Yellowstone National Park, a massive and costly annual operation to clear the roads of snow that was scheduled to start on Monday will be postponed due to the cuts,

Park managers have to trim $1.75 million from Yellowstone's $35 million annual budget, which will delay the opening of most entrances to America's first national park by two weeks.

It could mean millions of dollars in lost tourism and tax revenues for small, rural towns in Montana and Wyoming.

"I think it's counter-productive, and I expect a lot of people to be raising hell," said Mike Darby, whose family owns the Irma Hotel in Cody, Wyoming, at the east gate of the park.

Critics said Obama should have held meaningful talks with congressional leaders long before Friday's last-minute meeting at the White House, which failed to prevent the automatic cuts written into law during a previous budget crisis in 2011.

"The president should call the senior representatives of the parties together to Camp David - or any place with a table, chairs and no TV cameras - for serious negotiations on replacing the sequester with firm, enforceable beginnings of a comprehensive long-term debt stabilization agreement," former Republican Senator Pete Domenici and fiscal expert Alice Rivlin said in a statement released on Friday.

The budget veterans, who lead the Bipartisan Policy Center's Debt Reduction Task Force, called on Obama and congressional Republican leaders to "be willing to tell those on the polar extremes of their parties that a central majority consensus will govern. It's called leadership."

After months of silence on political issues, Obama's Republican opponent in last November's election resurfaced to take a swipe at the Democrat's handling of the sequestration mess. "No one can think that that's been a success for the president," Mitt Romney said in an interview to air on "Fox News Sunday."

The former Massachusetts governor accused Obama of "flying around the country and berating Republicans and blaming and pointing," instead of striking a budget deal.

Twenty-eight percent of Americans blame Republicans for the lack of a deal to halt sequestration, while 22 percent hold either Obama or the Democrats in Congress responsible, according to the Reuters/Ipsos poll. Thirty-seven percent blame them all.

The budget standstill has overshadowed Obama's aggressive set of policy goals ranging from boosting pre-school education to fighting climate change and reforming America's immigration system. But Obama vowed on Friday the fiscal troubles would not prevent him from advocating for those proposals.

"I think there are other areas where we can make progress even with the sequester unresolved. I will continue to push for those initiatives," he told a news conference.

(Editing by Alistair Bell and Todd Eastham)

Source: http://news.yahoo.com/spending-cut-showdown-threatens-obamas-second-term-agenda-025029989--business.html

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