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Obama puts fresh pressure on Republicans to avert spending cuts

U.S. President Barack Obama speaks about strengthening the economy for the middle class and measures to combat gun violence during a visit t
U.S. President Barack Obama speaks about strengthening the economy for the middle class and measures to combat gun violence during a visit t

By Steve Holland and Roberta Rampton

WASHINGTON (Reuters) - President Barack Obama renewed pressure on congressional Republicans to head off budget cuts that are due to begin on March 1, staging a White House appearance with emergency workers to illustrate jobs he said were at risk.

Obama is trying to get concessions from Congress to stall the cuts by ending tax breaks enjoyed mainly by wealthy Americans.

"My door is open. I put tough cuts and reforms on the table. I am willing to work with anyone to get this job done," Obama said at the event. In a symbolic gesture, Obama was flanked by 17 uniformed firefighters and law enforcement officers who would not necessarily be laid off by the cuts.

Obama plans similar events in the next 10 days. The administration believes the public will blame job losses on congressional Republicans, senior administration officials told reporters.

Unions are also planning events this week with toddlers in strollers and seniors in wheelchairs to underscore the impact the cuts will have on services.

With Congress off this week, it seems unlikely that a compromise will be reached by the March 1 deadline.

Unless there is a deal, about $85 billion in across-the-board spending cuts kick in at the beginning of March and continue through September 30 as part of a decade-long $1.2 trillion budget savings plan.

Private sector companies that have government contracts are expected to begin issuing more layoff notices as the deadline draws near, administration officials said.

The Pentagon is expected to notify Congress this week that it plans to put about 800,000 civilian employees on unpaid leave for up to 22 days in the coming months, a defense official said on Tuesday.

Under the sequestration budget measures, half the cuts would be shouldered by the Pentagon and the other half scattered among other government agencies.

"This is not an abstraction. There are people whose livelihoods are at stake," Obama said, noting the cuts, known as "sequestration," could hurt the economy.

Even if the cuts happen, Congress is expected to blunt their effect by negotiating a replacement measure in March while lawmakers work on a deal to fund government agencies that run out of money on March 27.

At the same time, the co-chairmen of a former fiscal commission created by Obama added to the spending debate by proposing $2.4 trillion in deficit reduction over 10 years.

OPEN DOOR?

Senate Republican leader Mitch McConnell criticized Obama for holding a "campaign-style" event rather than focusing on cutting government waste or trimming spending on green energy programs.

"President says his door is open, but he's spent more time in 2013 with Tiger Woods than with all congressional Republicans," said Doug Heye, a spokesman for House Republican leader Eric Cantor, on Twitter. He was referring to Obama's weekend golf outing with Woods in Florida.

White House spokesman Jay Carney would not say whether officials were holding meetings with Republicans.

"The problem here isn't a lack of meetings around the table in the Roosevelt Room or the Cabinet room," Carney told reporters.

Republican Speaker John Boehner said the House has twice passed a plan to replace the sequester with "common sense cuts" and said the president needs to show he was willing to make cuts to keep emergency workers and others on the job.

"Just last month, the president got his higher taxes on the wealthy, and he's already back for more," Boehner said in a statement.

Obama has been adamant that any budget agreement to replace the cuts reflect a balanced approach and include both budget cuts and tax increases.

To give Congress time to act on a long-term solution, Obama urged congressional Republicans to accept a smaller $110 billion package that Democrats proposed last week.

But Republicans believe they have raised taxes enough after reluctantly agreeing to increase them on the wealthy as part of a deal that avoided the "fiscal cliff" of higher taxes and spending cuts that would have kicked in at the end of 2012.

Republicans want deeper spending cuts to reduce the United States' $1 trillion annual deficits and $16 trillion national debt.

Democrat Erskine Bowles and Republican Alan Simpson, who led the fiscal commission, proposed cutting spending, overhauling the tax system and reforming the healthcare system. Under their plan, about one-fourth of the $2.4 trillion in deficit reduction would come from healthcare reforms and another fourth from tax reform.

The remaining reduction would come from a combination of mandatory spending cuts, stronger caps on U.S. discretionary spending, using the Consumer Price Index for inflation-indexed provisions in the budget and lower interest payments.

It is unclear how much impact the plan will have because it contains elements that have been non-starters for each party: further tax revenue, which has been rejected by Republicans; and deeper cuts to entitlement programs such as Medicare, a notion spurned by Democrats.

The $600 billion in proposed savings on federal healthcare spending reflects the scale of reduction that Republicans have sought in deficit talks. But the approach is more in line with Obama's proposals for reducing underlying healthcare costs and seeking modifications rather than radical changes to programs.

The healthcare target dwarfs both the $400 billion in savings from Medicare, Medicaid and other healthcare programs sought by Obama and the $342 billion in savings proposed by the Simpson-Bowles commission in December 2010. However, the two men said the new proposal is not based on commission findings but on ideas discussed in last year's fiscal cliff debate.

"What we tried to do is make enough cuts in healthcare to slow the rate of growth on a per capita basis to the rate of growth of the economy. In our opinion, that takes about $600 billion over a 10-year period," Bowles told CNBC.

(Additional reporting by Matt Spetalnick; Editing by Cynthia Osterman and Stacey Joyce)

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