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Obama calls for Congress to pass proposal, delay sequestration

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President Barack Obama made a plea to Congress Tuesday to pass, at the very least, a small package of spending cuts and tax reforms to delay larger and bigger problems.

Obama's appeal came as Congress' budget office projected a yearly federal deficit under $1 trillion for the first time in his presidency and as Republicans applied political pressure on the president to submit balanced budgets, pushing fiscal issues back to the forefront in Washington after weeks devoted to immigration and guns.

A short-term deficit-trimming measure would once again delay the broad and onerous spending cuts that are unpopular with both political parties, underscoring the government's difficulty adopting long-term budget policies. Obama conceded the problem, even though he has previously scoffed at temporary budget reprieves.

"Let's keep chipping away at this problem together, as Democrats and Republicans...," the president said from the briefing room.

Illustrating the challenge for the government, the Congressional Budget Office said the government will run a $845 billion deficit this year. That's down from last year's $1.1 trillion but still high enough to require the government to borrow 24 cents of every dollar it spends. The report predicted the deficit would decline to $430 billion by 2015, the lowest since President George W. Bush's last year in office.

However, as more baby boomers retire and claim Medicare and Social Security, deficits would move higher and again reach near $1 trillion in the latter portion of the 10-year window.

"He'd really like to see a grand bargain...This grand bargain that he and John Boehner keep going after but said if we can't get there at least do a short-term deal...," explained Politico Deputy Managing Editor Rachel Smolkin. 

The automatic cuts Obama is seeking to avoid are part of a 10-year, $1 trillion deficit reduction plan that was supposed to spur Congress and the administration to act on long-term fiscal policies to stabilize the nation's debt. Though Congress and the White House have agreed on about $2.5 trillion in cuts and higher taxes since the beginning of 2011, they have been unable to close the deal on their ultimate goal of reducing deficits by about $4 trillion over a decade.

Obama did not specify a time span or a dollar amount for a stopgap measure, and neither he nor White House aides provided any detailed spending cuts or tax increases that could be used to postpone the deeper, automatic cuts. In order to put off cuts until the end of the fiscal year, Sept. 30, Congress would have to find $85 billion in deficit reduction.

The White House insists, however, that any short-term deficit-trimming package or any long-term debt stabilization plan must consist of both spending cuts and new tax revenue. Republicans have said they will oppose tax increases.

The automatic spending cuts, known as a "sequester" in budget language, were supposed to kick in Jan. 1, but Obama and Congress identified $24 billion in deficit reduction during a New Year's agreement, thus averting the cuts until March 1.

Though that date is more than three weeks away, the White House showed some urgency in making its request Tuesday. Several Republican lawmakers had begun to signal that they might be willing to let the automatic cuts kick in as the only viable means of achieving deficit reduction, even though the reductions would cut into programs they support, such as military spending. Moreover, the White House feared the mere threat of the cuts was disruptive as government agencies began to prepare layoff notices.

"There's no reason that the jobs of thousands of Americans who work in national security or education or clean energy, not to mention the growth of the entire economy, should be put in jeopardy just because folks in Washington couldn't come together to eliminate a few special-interest tax loopholes or government programs that we agree need some reform," Obama said.

The president mentioned in his remarks that the would "delay the economically damaging effects of sequestration for a few more months." But then, Congress would still have to come up with a master plan, or as Obama put it a "smarter solution" for the long-term. But the idea of another delay is what has many people on the Hill upset.

Click here to hear the president's statement.

The Associated Press contributed to this report.

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