WASHINGTON—President Barack Obama said Friday the $85 billion in "dumb, arbitrary" automatic budget cuts known as the sequester will move ahead following no progress in talks, and continued to blame Republican opposition to new tax revenues as the main obstacle to a deal.
Associated Press House Speaker John Boehner spoke to reporters outside the White House Friday.
WSJ's Sudeep Reddy joins the News Hub as $85 Billion in budget cuts, known as the 'sequester' are slated to kick in. Photo: Getty Images.
In a press briefing with reporters following a meeting with top congressional lawmakers, Mr. Obama said he has gained little traction with Republicans over a plan that he says calls for "serious" spending cuts and entitlement changes, as well as additional tax revenue, and that "goes right to the heart of our long-term deficit problem." Republicans counter that only spending cuts, not new tax revenue, should be used to replace the sequester's cuts.
"So far we've gotten rebuffed because what Speaker [John] Boehner and the Republicans have said is, 'We cannot do any revenues,' " Mr. Obama said. " 'We can't do a dime's worth of revenue.' So what more do you think I should do?"
Earlier Friday, Mr. Obama attended a meeting with Senate Majority leader Harry Reid (D., Nev.), Mr. Boehner (R., Ohio), House Minority Leader Nancy Pelosi (D., Calif.) and Senate Minority Leader Mitch McConnell (R., Ky.).
In his own brief statement after the White House meeting, Mr. Boehner said: "The House has laid out a plan to avoid the sequester. I would hope that the Senate would act. But let's make it clear that the president got his tax hikes on Jan. 1. This discussion about revenue, in my view, is over."
Expectations were low to begin with. "There will be no last-minute, back-room deal and absolutely no agreement to increase taxes," Senate Minority Leader Mitch McConnell (R., Ky.) said in a statement Friday morning prior to the meeting.
In his remarks, Mr. Obama was careful to not predict any sort of financial crisis as a result of the sequester hitting, instead emphasizing the impact on working Americans and a potential drag on economic growth.
"It is absolutely true that this is not going to precipitate the kind of crisis we talked about with America defaulting and some of the problems around the debt ceiling," Mr. Obama said. "I don't anticipate a huge financial crisis, but people are going to be hurt."
The inevitability of the cuts known as the sequester seemed assured in recent days as both Republicans and Democrats remained at loggerheads over Mr. Obama's demand that any plan to replace the cuts include more tax revenue.
Without a deal, Mr. Obama will have to sign Friday an order implementing the sequester, which will trigger changes at the numerous federal agencies affected by the cuts.
Under current law, the cuts must be fully implemented by the end of the fiscal year on Sept. 30, and they are broadly split between the Pentagon budget and spending on other federal government departments and programs.
The inability of lawmakers to avert or quickly replace the across-the-board cuts with a longer-term deficit-reduction plan may signal protracted political uncertainty that presents risks both to Congress and Mr. Obama. It is unclear how the public will react to the cuts. The White House is betting that Republicans will receive the blame for any air-travel delays and job furloughs.
Many Republicans scoff at the notion that a 2.4% cut from a $3.55 trillion federal budget can't be absorbed easily. They point to a rising stock market as a sign that Americans are shrugging off the sequester's effects, and accuse the White House of preparing to manipulate the cuts to gain political leverage.
The cuts are a down payment on $1.2 trillion in spending reductions required over the next decade, as outlined by a 2011 debt deal that requires automatic cuts if Congress fails to reach a deal to reduce the deficit by at least that amount.
The impact of the sequester is expected to be uneven. Communities heavily dependent on defense money will be hit hard by the cuts. Other regions could see very little noticeable effect on economic activity.
—Damian Paletta and Sudeep Reddy contributed to this article. Write to Andrew Ackerman at andrew.ackerman@dowjones.com
