In a conference call with reporters Monday, a top official of the National Economic Council (NEC) said some of the cuts from the $85 billion in spending cuts over the next seven months, triggered by the so-called sequester, will be felt immediately while others, including a larger portion of defense versus non-defense spending, won't hit for upwards of a month.
Whenever the cuts do kick in, private sector jobs will be harder hit than public sector jobs, which themselves will cause a slowing of the economy, enough that economic experts say a recession could become reality as furloughs and spending avoidance are enacted.
Private jobs hurt more than federal jobs
Senior Administration Officials including NEC Principal Deputy Director Jason Furman and Deputy Press Secretary for the Economy Amy Brundage held an on-the-record conference call for regional reporters to discuss the devastating impact that the sequester will have on jobs and middle class families across the country, should Congressional Republicans fail to compromise to avert the sequester dead of March 1st, this Friday.
At a State Dining Room meeting earlier in the day at the White House, President Obama spoke to the National Governors Association, stressing upon the state CEOs the need for bipartisan cooperation, all the while pressing them to work together with their partners in Washington to put the focus back on the next generation, rather than the next election.
"All of us are elected officials. All of us are concerned about our politics, both in our own party’s as well as the other party’s. But at some point, we've got to do some governing," President Obama said. "And certainly what we can't do is keep careening from manufactured crisis to manufactured crisis. As I said in the State of the Union, the American people have worked hard and long to dig themselves out of one crisis; they don't need us creating another one. And unfortunately, that's what we've been seeing too much out there."
U.S. House Speaker John Boehner, of Ohio, told listeners today that President Obama seems "more interested in campaign rallies" than averting consequences of the sequester. "It's time to act," he said, adding that unless spending in Washington comes under control, tens of millions of future jobs won't be created and a heavy debt load will be on future generations.
Other House Leaders, including Kathy Morris Rodgers, Eric Cantor and Kevin McCarthy, said a combination of there are smarter cuts to make, the president should lead, and his solution always includes taking more from hardworking Americans.
Speaker Boehner said the House as voted twice so far and doesn't want to do it a third time. Majority Leader Cantor said it's a false choice between either raising taxes or sacrificing national security, a Napolitano said will happen if the disastrous cuts are not avoided.
Republicans have adopted the narrative that President Obama, if he were a real CEO, would "find ways to make cuts without hurting people" one reporter said. The White House should cut federal bureaucrats, and that not doing that shows "it's all politics" and that the president is only "trying to make cuts as hurtful as possible."
Contrary to traditional pillars of strength Republicans have enjoyed like defense and terrorism, Homeland Security Secretary Janet Napolitano warned Monday that allowing the $85 billion sequester to go forward will make the U.S. more vulnerable to a terrorist attack. "
HSA chief warns of security compromises
I don't think we can maintain the same level of security at all places around the country with sequester compared to without sequester," Napolitano, whose agency includes the Transportation Security Administration, said. Napolitano reminded listeners that the blunt nature of the $85 billion in automatic spending cuts set for March 1 “makes it awfully, awfully tough” to mitigate threats faced by the nation.
In delivering the bitter news today, Furman said there will be macro-economic consequences, one of which will be that the bulk of jobs lost will come from the private sector as government contracts, especially defense spending contracts, buckle to spending reductions.
Furman and Brundage reiterated that this is "all avoidable" and "much better paths" exist, if both Democrats and Republicans in Congress can compromise. The idea of the sequester, they said, was never meant to become policy, but Republicans appear ready to let what was proposed as a solution so horrible that no one would allow it to happen happen. Brundage said finding a balanced solution is the solution, and reducing tax benefits for high-end households is part of the White House's definition of balanced.
Furman said Senate Majority Leader Harry Reid, of Nevada, has a plan to delay the sequester until the end of the federal fiscal year in October the White House supports. One reason to delay, the duo said, is to give the president's plan more time to work, that would make matters better.
To date, according to Furman, factoring in interest savings, President Obama has reduced spending by $1.8 trillion. He asked Republicans whether they think a 13 percent cut in defense spending over next 7 months is good for the nation, or maybe even some of their districts where military contracting is so important, like Norfolk, VA?
A call to governors
Included in his remarks to governors today was this call to the challenge ahead. "This morning, you received a report outlining exactly how these cuts will harm middle-class families in your states. Thousands of teachers and educators will be laid off. Tens of thousands of parents will have to deal with finding child care for their children. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings. Tomorrow, for example, I’ll be in the Tidewater region of Virginia, where workers will sit idle when they should be repairing ships, and a carrier sits idle when it should be deploying to the Persian Gulf."
Obama promised governors he'll accelerate actions in two critical areas. First, regional teams will be established to focus on the unique needs in various parts of the country. Second, a priority will be education, in particular, education that starts at the earliest age. Every dollar invested in early childhood education can save more than seven dollars later on, by boosting graduation rates, reducing teen pregnancy, even reducing incidents of violent crime.
State governors heard a now familiar refrain from President Obama. "The American people are out there every single day, meeting their responsibilities, giving it their all to provide for their families and their communities. A lot of you are doing the same things in your respective states. Well, we need that same kind of attitude here in Washington. At the very least, the American people have a right to expect that from their representatives."
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