While both Republicans and Democrats say they oppose the blunt approach imposed by the across-the-board cuts that will target defense and other domestic spending programs on March 1, the GOP feels it has the political advantage to press for deeper entitlement reforms as the cuts approach.
The two sides have played tug of war over tax and spending issues for more than a year and just narrowly avoided triggering their self-imposed sequester at New Year's, in hopes that they could craft a solution by the new March deadline.
After an embarrassing performance at the end of 2012, when House Speaker John Boehner was forced to backtrack vows that his Republican majority would oppose any tax increases proposed by the Obama administration, the GOP has sought to be more judicious in picking its legislative fights.
The House GOP backed down from a chance to press for spending cuts in exchange for voting to increase the federal debt ceiling in the face of President Barack Obama's stated refusal to "play politics" over paying the country's bills. But now Republicans have regained their fortitude, vowing to hold firm on certain spending and entitlement cuts in the face of Democratic opposition.
President Barack Obama, however, continued to make the administration's case Tuesday that allowing the so-called sequester to take effect would be more harmful to the still-struggling economy than the alternatives.
"Our economy right now is headed in the right direction and will stay that way as long as there aren't any self-inflicted wounds coming out of Washington, so let's keep on chipping away at this problem together as Democrats and Republicans to give our workers and our businesses the support that they need to thrive in the weeks and months ahead," he said, adding that the country can't "cut [its] way to prosperity."
Obama also pitched a comprehensive federal budget that would combine spending cuts—including reforms to costly entitlement programs – and increased tax revenues from tax reform and the closing of loopholes in order to decrease the deficit, though admitted he's not optimistic a deal can come together in time.
"If Congress can't act immediately on a bigger package—if they can't get a bigger package done—by the time the sequester is scheduled to go into effect, then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution," he told reporters during a White House press briefing.
House Speaker John Boehner quickly rebuffed the president's proposal, pointing out that House Republicans had already voted multiple times to replace the so-called sequester cuts with their own set of cuts.
"We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes," he said in a statement. "The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years."
The president also cited public opinion polls indicating Americans support what he called "a balanced approach" to deficit reduction and said he stands by proposals he's made to Boehner in recent months.
But Democrats and Republicans remain stuck on the issue of taxes and what to do with any savings achieved through comprehensive tax reform. Democrats want to use any money gained from tax changes to pay down the deficit while Republican leaders have said they want to use it to reduce the tax burden on businesses and some individuals.
"In order to achieve the full $4 trillion in deficit reductions that is the stated goal of economists and our elected leaders, these modest reforms in our social insurance programs have to go hand in hand with a process of tax reform so that the wealthiest individuals and corporations can't take advantage of loopholes and deductions that are not available to most Americans," Obama said.
Meanwhile, a group of top conservative House and Senate Armed Services Committee members scheduled a press conference Wednesday to discuss their proposal to avoid the defense portion of the sequester from taking effect.
John Engler, president of the Business Roundtable, a collection of CEOs at dozens of top U.S. companies, agreed with the premise of tax reform but was wary of Obama's approach, though he agreed that the sequester would be bad for the overall economy.
"Any significant tax changes should be made only within the context of comprehensive tax reform that will put the nation on a path to more robust growth," Engler said in a press release. "As for spending, Business Roundtable favors a more thoughtful allocation of spending cuts rather than sequestration's across-the-board, automatic spending reductions. This is achieved by the House and Senate passing budgets and working out the details in conference."
The politicking will only ratchet up as March 1 approaches, with powerful lobbying industries on both sides of the aisle pressing lawmakers to act to avoid the $1.2 trillion in cuts.