President Obama Threatens Budget Cuts

Ralph Christie is watching the March 1 deadline very closely. As CEO of Merrick & Company, an engineering company that builds nuclear plants and research laboratories, Christie has been preparing for a complete economic crisis, assuming that the federal budget may arbitrarily take $85 billion (64.3 billion euros) in automatic cuts, a possibility that is becoming more and more likely. These cuts come in the context of a conflict between Barack Obama and congressional Republicans that has been ongoing for nearly two years.

Merrick & Company employs a staff of five hundred employees, and reports a turnover of $110 million, 50 percent of which depend on public commissions. Ralph Christie believes that the company could lose up to a fifth of its contracts. He has already dismissed thirty people. “I think this will end badly,” he said.*

On Feb. 24, 2013, five days before the budget cuts were to take place, the White House published a summary — state by state — of the consequences that await Americans if Congress does not adopt a comprehensive plan to reduce the deficit. In Colorado, for example, where Merrick & Company is headquartered, 12,000 civilian employees of the Department of Defense would be furloughed, 14,810 people would lose access to job search assistance and 2,240 fewer children would be vaccinated for diseases like measles and mumps. Nutritional assistance for seniors would be cut, and up to 300 disadvantaged children would lose access to childcare.

The sequester is the third major event in the war between Democrats and Republicans over deficit reduction. The war began in August 2011, when the Republican majority in Congress and the president agreed to postpone difficult decisions such as what expenses to cut and how to increase revenue until Jan. 1, 2013, after the elections. In extremis, at the end of December, the Republicans finally agreed to a tax increase on Americans with the highest incomes (more than $400,000, or 302,500 euros, per year). They also agreed to raise the debt ceiling, giving Barack Obama a clear victory.

The White House Increases Pressure

After unsuccessfully attempting to reach a compromise by postponing budget cuts for a period of two months, the issue has returned. The American people, accustomed to dramatic deadlines, seem to be keeping their composure as they watch the newest episode of the confrontation unfold. However, the White House has begun to increase the pressure on the issue. Obama’s secretaries each detailed the nightmares that await Americans if Republicans continue to refuse tax increases for the rich: four hours of waiting after arrival at airports in New York and Los Angeles, potential widespread food poisoning due to the elimination of 2,100 health inspections, air traffic controllers forced to take unpaid leave and the mentally ill forced to return to the streets.

The president himself announced, “thousands of teachers and educators will be laid off. Tens of thousands of parents will have to scramble to find child care.” Already, he insisted, the deployment of an aircraft carrier in the [Persian] Gulf has been postponed as a result of the budget cuts. “Are Republicans in Congress really willing to let these cuts fall on our kids’ schools and mental health care just to protect tax loopholes for corporate jet owners? Are they really willing to slash military health care and the border patrol just because they refuse to eliminate tax breaks for big oil companies?” Obama asked.

The cuts would amount to $85.4 billion within seven months (until the beginning of the fiscal year, which starts on Oct. 1). Half of these cuts would come from the defense budget, and the rest from social programs. No program would be completely cut, but budgets across the board would be automatically reduced: 13 percent from the Department of Defense (which does not stop the Pentagon’s budget from retaining its status as the largest in the world, far ahead of any other) and nine percent from the rest. According to a list released by the White House, 700,000 children aged three to five would lose educational funding, the Federal Bureau of Investigation would lose $480 million, the Library of Congress would lose $31 million and the Washington D.C. Museum of Tolerance would lose $2.6 million. Most of the 398 national parks across the United States would be forced to reduce their open hours.

“Balanced” Plan That Would Prevent Automatic Cuts

The president accused Republicans of trying to force children, military and seniors to bear the weight of the cuts, rather than attacking those who are privileged enough to have large fortunes and private jets. Obama has proposed a “balanced” plan that averts automatic cuts and reduces the deficit by over $4 billion during a 12-year period. The proposal has twice as many spending cuts as increases, says the White House.

Republicans are not interested in conceding to increased taxes. After a considerable deal of opposition to the planned reductions in the defense budget, and claims that Obama was endangering national security, they later changed their minds and now say that the cuts might be a bitter pill for them to swallow, but could prove beneficial overall. “[T]o not cut 2.5 percent out of the total budget over a year when it’s twice the size it was 10 years ago? Give me a break,” justified Tom Coburn, a Republican senator from Oklahoma.

Certain economists relativize the consequences of cutting $85 billion from a budget of $3.5 trillion in 2013. Each side in the confrontation attempts to blame the other. But if we believe the results of a recent poll from USA Today, Barack Obama still has the upper hand: Only 31 percent of Americans believe that he is responsible for the crisis, while 49 percent of respondents blamed Republicans in Congress.

*Editor’s note: This quote, though translated correctly, could not be verified.