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White House Warns of Job Losses Under Sequester

The White House is ramping up its warnings about the automatic spending cuts scheduled to hit March 1, warning it would lead to hundreds of thousands of job losses, furloughs and impaired government services across the government with fewer food safety inspectors, children in Head Start and FBI agents on the beat.

“There is no question that we need to cut the deficit, but the President believes it should be done in a balanced way that protects investments that the middle class relies on,” the White House said in a 2,000-word fact sheet detailing the cuts.

“Unfortunately, many Republicans in Congress refuse to ask the wealthy to pay a little more by closing tax loopholes so that we can protect investments that are helping grow our economy and keep our country safe. Our economy is poised to take off but we cannot afford a self-inflicted wound from Washington. We cannot simply cut our way to prosperity, and if Republicans continue to insist on an unreasonable cuts-only approach, the middle class risks paying the price.”

White House officials declined to say their preference for the ratio of cuts to revenue in any short-term package, like the one President Barack Obama suggested was needed earlier this week. Nor has the White House proposed a package of its own. But Obama said a short-term delay for the next several months would give Congress more time to reach a bigger budget bargain.

Jason Furman, deputy director of the National Economic Council, said only that the package must be “balanced” and said the ratio would be something less than the 1:1 ratio the president suggested in his December fiscal cliff offer to Speaker John A. Boehner, R-Ohio. That’s because the president has since then gotten more than $600 billion in revenue without any cuts, Furman noted, and he reiterated that the larger offer remains on the table.

Press Secretary Jay Carney declined to issue a formal veto threat over GOP plans to offer a cuts-only package, but he said that balance was “essential” to a deal. And he dismissed Republican efforts to blame the sequester on the White House as a “fanciful confection.” Carney noted that Republicans celebrated the August 2011 deal on the debt limit, which created the sequester as an incentive for lawmakers to craft a broader deficit reduction package. That broader plan never materialized. But at the time of the debt limit agreement, Boehner bragged he got 98 percent of what he wanted, and the White House endorsed it as a means of ending a crisis that nearly saw the country default on its obligations for the first time in its history.

As both parties try to find a new way to avert the sequester this year, Republicans have taken to calling it the “president’s sequester,” and have said they would oppose any new revenue.

Furman and Danny Werfel, the federal controller for the White House’s Office of Management and Budget, warned the impact on federal services and the larger economy would be severe if no deal is reached.

Werfel said hundreds of thousands of federal employees would have to be furloughed, although agencies would have some discretion over exactly when the cuts would take place. Agencies under the law could wait to implement cuts in hopes that Congress reaches a deal, but Werfel warned “hope” wouldn’t be enough, and they would have to plan to ensure the $85 billion cut takes place by Sept. 30.

Werfel also warned that because of the mindless nature of the sequester, agencies would not be able to spare programs, even if they are a higher priority. For instance, he said the FAA would be prohibited from sparing air traffic control spending by shifting cuts to other areas.

Furman did not provide an estimate for job losses and the impact on the Gross Domestic Product beyond saying hundreds of thousands jobs would be lost. He said the economy got a taste of the impact in the fourth quarter of 2012, when defense cuts were the difference between a growing GDP and a shrinking one.

Furman also said that now is a particularly bad time for the sequester to take effect; the economy is growing and the deficit is shrinking already. The administration took credit for the steepest drop in the deficit as a percentage of GDP since World War II.

Among the cuts the White House warned about Friday are:

• 70,000 children kicked off Head Start, 10,000 teacher jobs “at risk” and funding for 7,200 special education teachers and staff cut.

• 373,000 people losing access to mental-health treatment.

• 1,000 fewer federal agents at the FBI and other federal agencies.

• Hundreds of federal prosecutors furloughed, leading to more than 1,000 fewer criminal prosecutions.

• Thousands of fewer federal research grants at the National Institutes of Health and the National Science Foundation.

• Reduced staffing at the IRS, which the White House warns would lead to delayed customer service and cost the government billions in uncollected revenue.

House Republicans have argued that the revenue issue is settled and are demanding Obama come up with alternate cuts, noting that they have done so. Obama, however, has demanded a “balanced” plan that would replace the sequester with a combination of cuts and revenue. One side will have to blink for the latest game of budget chicken to end, but House Republicans so far appear more inclined to let the sequester take effect rather than submit to more tax increases.

Democrats are clearly trying to pressure Republicans into considering a sequester fix that would include some revenue. In addition to the Office of Management and Budget call on Friday, the Senate Appropriations Committee has a Feb. 14 hearing planned on the sequester, intended to emphasize the effects it would have on the daily lives of many Americans. The headlines generated by the OMB release and hearing could trigger tough questions for many lawmakers during their talks with constituents during the late February recess.

Senate Democrats also intend to finish as early as next week a short-term sequester replacement bill aimed at combining alternative spending cuts and new tax revenue to avert the $85 billion in automatic spending cuts that would take place this year. The president earlier this week advocated for such a measure as a way to avoid what he said would be dire consequences for the economy.

Agriculture Chairwoman Debbie Stabenow of Michigan, a senior tax writer, told CQ Roll Call that the measure might cost $112 billion to $120 billion. The measure might replace the sequester through the rest of fiscal 2013 or to the end of the calendar year. Democrats will need to decide how to split the short-term sequester package between spending cuts and tax revenue. Republicans, who adamantly oppose any use of tax revenue to replace the sequester, are not part of the broader discussions with the Democratic senators.

Kerry Young contributed to this report.

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