With just a week until the mandatory budget cuts known as the sequester carve $85 billion in federal spending out of the U.S. economy, and with precious few opportunities remaining for policymakers to negotiate a deal to avoid the cuts, President Obama dialed down the doomsday rhetoric today, telling reporters that the looming cuts will not wreck the entire global economy.
"I think, unlike issues like the debt ceiling, the sequester going into effect will not threaten the world financial system. It's not like the equivalent of the U.S. defaulting on its obligations, " Mr. Obama said, referencing the nasty 2010 debt ceiling fight that threatened a U.S. default and led to the first-ever downgrade of America's credit rating
"What it does mean," the president continued, "is that if the U.S. is growing slower, then other countries are growing slower" due to America's considerable influence on the global economy.
The automatic spending cuts that land on March 1, Mr. Obama warned, will lead to both "direct job loss" and slower job growth due to a "softer" economy.
But despite the dearth of available time for policymakers to negotiate a solution, "I never think that anything's inevitable," the president said. "We always have the opportunity to make the right decisions...hope springs eternal."
Avoiding the cuts "should be a no-brainer," Mr. Obama said, adding, "I don't need to persuade world leaders of that. I've got to persuade members of Congress - and that can be harder sometimes."
White House press secretary Jay Carney said today that while "We remain hopeful that Congress will act" to avoid the sequester, lawmakers may need to buy themselves more time again, as they did by postponing the previous sequester deadline at the end of 2012.}
Republicans may "come to the conclusion that is better simply to do what they did in December and allow this manufactured deadline to be postponed so they can get back to work" on negotiating a compromise, Carney said, suggesting that another two-month delay is a possibility.
Congress, currently in recess, returns to Washington next week to continue negotiating a deficit reduction package to replace the sequester. Both parties have blamed each other for the failure to secure a deal, with Republicans charging that Democrats will not agree to meaningful spending cuts and Democrats accusing the GOP of protecting tax loopholes for the privileged.
The president's comments came after a bilateral meeting between Mr. Obama and the Japanese Prime Minister Shinzo Abe at which the two leaders addressed issues ranging from the global economy to the recent provocative nuclear test by North Korea.