As Obama readies economy-focused State of the Union speech, defense cuts loom

President Barack Obama delivers his State of the Union address before a joint session of Congress on Capitol Hill January 24, 2012 in Washington, D.C. Saul Loeb / Pool / Getty Images

President Obama's upcoming State of the Union address on Tuesday is expected to focus on economic revitalization in America, according to presidential aides.

But Mr. Obama's account of the U.S. economic recovery will carry with it an asterisk: the automatic spending cuts of the so-called sequester, due to land at the beginning of March, could deal severe a severe blow to the economy. And less than three weeks out from the onset of sequestration, there is no resolution in sight.

Based on the punchy performance of several key congressional players on the Sunday political talk shows, the parties remain deeply divided on the best path to avert the sequester, with disputes over spending, taxation, and entitlement reform threatening to scuttle any eventual deal.

House Minority Leader Nancy Pelosi, D-Calif., laid down the gauntlet on "Fox News Sunday", saying that Congress must act to avert the sequester - but not if it means cutting too deeply into Democratic spending priorities.

"It's almost a false argument to say we have a spending problem," she said, pointing to cuts in agriculture subsidies and the 2011 Budget Control Act that slashed hundreds of billions of dollars from discretionary spending. "We've had plenty of spending cuts...what we do need is more revenue and more cuts."

"What I would like to see...is a big, balanced, bold proposal" to reduce the deficit, she said. "Short of that, we must do something to avoid the sequester."

Pelosi's suggestion echoed the president's weekly address over the weekend, in which he called on Congress to pass "balanced cuts and close more tax loopholes until they can find a way to replace the sequester with a smarter, longer-term solution."

House Majority Leader Eric Cantor, R-Va., speaking on NBC's "Meet the Press", would not accept Democrats' calls for more revenue. "Every time you turn around," Cantor said, the Democrats' "answer is to raise taxes."

The president "just got his tax hike on the wealthy," Cantor said, referring to the recent "fiscal cliff" deal that allowed taxes to rise on personal income in excess of $400,000. "You can't, in this town, turn around and raise taxes every three months. Again, every time, that's his response."

"The House has put forward an alternative plan, and there's been no response" from Democrats, Cantor said. "The bottom line is we want tax reform, but we want to plug those loopholes that the president talks about, to bring down tax rates, because we believe that's pro growth...the president's not talking about that. He's talking about raising more taxes to spend."

Rep. Tom Cole, R-Okla., seconded Cantor on ABC's "This Week", saying Republicans would "absolutely not" agree to new revenue as part of a sequester deal.

Cole, who angered some conservatives by counseling Republicans to accede to tax hikes for the wealthy during the "fiscal cliff" negotiations, was notably inflexible on the question of raising more revenue. "The president accepted no spending cuts back in the fiscal cliff deal 45 days ago," he said. "So you get no spending cuts back then, then you're going to get no revenue now."

  • Jake Miller

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