President points out how sequestration would harm economy

In his State of the Union address on Feb. 12, President Barack Obama called upon Congress to act to resolve the fiscal challenges facing the nation, saying that decisions made now will have a strong impact on the nation’s economic recovery.

With the sequester of cuts to both defense and non-defense spending required by the Budget Control Act of 2011 looming, the president highlighted the deficit reduction of approximately $2.5 trillion achieved within the past few years. He noted that the country is more than halfway to the $4 trillion in deficit reduction necessary to stabilize the economy.

The president said the cuts mandated by the sequester would “devastate priorities like education, energy, and medical research.” He argued that the cuts “would certainly slow our recovery” and cause job losses.

“Broad-based economic growth,” he said, “requires a balanced approach to deficit reduction, with spending cuts and revenue.”

The sequester would impact federally funded programs implemented at the local level, including the Community Development Block Grant program, Title 1 and Individuals with Disabilities Education Act services, Community-Oriented Policing Service grants, and state revolving funds for clean water.

President Obama stated that shifting cuts from defense spending to education and entitlement programs, as has been proposed in the House of Representatives, is “an even worse idea” than the implementation of the set of cuts to both defense and non-defense spending required by the Budget Control Act and set to occur on March 1.

The president is calling for modest reforms of entitlement programs, the elimination of tax loopholes and certain deductions, and comprehensive tax reform to further reduce the deficit.

Noting that deficit reduction alone is not an economic plan, President Obama also announced the expansion of his manufacturing innovation institute initiative, launched last year with the creation of a high-tech manufacturing hub in Youngstown, Ohio. Three additional hubs will be created this year, he said, and he is seeking to create a network of 15 hubs to promote the future of American manufacturing.

Citing “an aging infrastructure badly in need of repair,” the president proposed a “Fix-It-First” program that would create jobs to repair the infrastructure most urgently in need, and a “Partnership to Rebuild America” to attract private capital for investments important to business development, including port improvements and modernized pipelines.

The president’s annual address, also included a call to raise the federal minimum wage to $9 an hour; to develop a market-based solution to climate change; to make high-quality preschool available to each child; and to bring to a vote the gun policy bills pending before Congress.