White House says "will be prepared" if spending cuts bite

Reuters News
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Posted: Jul 11, 2012 3:57 PM
White House says "will be prepared" if spending cuts bite

WASHINGTON (Reuters) - The White House said on Wednesday it would be ready if painful automatic spending cuts are triggered next year, but urged Congress to take a "balanced approach" to tackle the federal budget deficit and avoid the controversial sequesters.

The United States faces what some economists are calling a 'fiscal cliff' on January 1 as Bush-era tax cuts expire and $1.2 trillion in automatic spending reductions begin to bite, unless Congress agrees to measures that curb the deficit over time.

"While OMB (the White House Office of Management and Budget) has not yet engaged agencies in planning, our staff is conducting the analysis that is necessary to move forward should that be required," said White House press secretary Jay Carney.

Government agencies need instructions from OMB on how to implement the cuts, which fall equally on defense and non-defense spending programs and were specifically designed to be painful in order to spur Congress to agree to a deficit deal.

The automatic cuts were part of an agreement last year to raise the U.S. debt ceiling, which Republicans insisted be linked to deficit reduction measures. They oppose steps that involve raising taxes, while Obama's Democrats say deficit reduction cannot come only through spending cuts.

"Should it get to the point where it appears Congress will not do its job and the sequester may take effect, OMB, the Defense Department and the entire administration will be prepared," Carney said.

Analysts expect action will be delayed until after the November 6 election, when lawmakers and the White House will use the lame duck weeks remaining to the current Congress to confront the problem, before the next Congress takes office in January.

(Reporting by Alister Bull; editing by Todd Eastham)