Obama orders $105 billion spending cuts, blames Republicans

WASHINGTON (AFP) - President Barack Obama reluctantly ordered an US$85 billion (S$105 billion) austerity drive on Friday that could slow the US economy and slash jobs, after blaming Republicans for refusing to stop the "dumb" spending cuts.

Obama complied with his legal obligations and initiated the automatic, across-the-board cuts in domestic and defense spending, following the failure of efforts to clinch a deal with Republicans on cutting the deficit.

The president signed an order bringing the arbitrary cuts into force, saying they should be made in "strict accordance" to US law, and a report by his Office of Management and Budget detailing the cuts to each agency.

Obama had earlier blamed the austerity time bomb on Republicans, who refused to close tax loopholes used by the rich and corporations combined with more targeted spending cuts, in what he calls a "balanced" approach to deficit reduction.

"I am not a dictator. I'm the president," Obama said, warning he could not force his Republican foes to "do the right thing," or make the Secret Service barricade Republicans leaders in a room until a deal is done.

"These cuts will hurt our economy, will cost us jobs and to set it right both sides need to be able to compromise," Obama said, before decrying the budget trimming as "dumb" and "unnecessary."

Only three months after winning re-election, and with the extent of his authority in Washington again constrained, Obama bemoaned his inability to do a "Jedi mind-meld" to get Republicans to change their minds, using imagery from Star Wars and Star Trek.

Obama was bound by law to initiate the automatic, indiscriminate cuts, which could wound the already fragile economy, cost a million jobs and harm military readiness, by the end of Friday.

The hit to military and domestic spending, known as the sequester, was never supposed to happen, but was rather a device seen as so punishing that rival lawmakers would be forced to find a better compromise to cut the deficit.

Both sides agree that the sequester is a blunt instrument to cut spending, as it does not distinguish between essential and wasteful programs - in what Obama has branded a "meat-cleaver" approach.

New Defense Secretary Chuck Hagel warned that the sequester could endanger the military's capacity to conduct its missions.

"Let me make it clear that this uncertainty puts at risk our ability to effectively all of our missions," said Hagel.

The Pentagon's budget is set to be slashed by roughly $46 billion.

The president appeared irritated but combative as he spoke to reporters after meeting with his chief foes - House Speaker John Boehner and Senate Republican Minority Leader Mitch McConnell - and allies Democratic Senate Majority Leader Harry Reid and top House Democrat Nancy Pelosi in the Oval Office.

Boehner emerged from the talks to signal to reporters that Republicans would not budge on Obama's key demand for a deal that would raise tax revenues.

"Let's make it clear that the president got his tax hikes on January 1.

This discussion about revenue in my view is over," Boehner said.

"It is about taking on the spending problem in Washington."

Even Obama's defeated election rival Mitt Romney got in on the action, slamming the president in a rare interview, complaining he was "blaming and pointing" at Republicans and not leading the country.

The stalemate is likely to be prolonged, as the president's tactics are based on a strategy of pinning blame on Republicans for the pain of the sequester, which may take weeks to become evident.

The next point of leverage is likely a bill to fund government operations, which Congress must pass by March 27, or see the government shut down.

Both sides indicated that they would seek to avoid that scenario, meaning that the sequester cuts may remain in place - unless a way can be found to make equal spending reductions that are less punitive.

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