WASHINGTON (USA TODAY) - The White House and congressional Republicans prepared Friday to leap into the fiscal unknown, facing $85 billion in automatic budget cuts unless the two sides can strike an 11th hour deal at a White House meeting.
"As a nation, we can't keep lurching from one manufactured crisis to another," President Obama said in a statement Thursday. "Middle-class families can't keep paying the price for dysfunction in Washington."
Obama meets at 10:05 a.m. Friday with a group of congressional leaders that includes the top two Republicans, House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky.
The top congressional Democrats -- Senate Majority Leader Harry Reid, D-Nevada, and House Minority Leader Nancy Pelosi, D-Cal. -- will also attend, as will Vice President Biden.
The meeting takes place on deadline day for the sequester, $85 billion in automatic domestic and defense cuts that Democrats and Republicans say will hurt the economy and undermine national security.
But there are no signs the parties have made progress on the issue that has divided them in this and previous budget disputes -- the best way to cut a federal debt that now tops $16.5 trillion.
Obama has called for debt reduction that includes both budget cuts and increased tax revenues by eliminating loopholes and deductions that benefit the wealthy.
"We should work together to reduce our deficit in a balanced way, by making smart spending cuts and closing special interest tax loopholes," Obama said in his statement.
Republicans, meanwhile, say Obama got higher tax rates as part of a January agreement to head off the series of tax hikes and spending cuts known as "the fiscal cliff."
"The American people will simply not accept replacing spending cuts agreed to by both parties with tax hikes," McConnell said. "And I plan to make all of this clear to the President when I meet with him (Friday)."
Boehner said Obama and Senate Democrats "are demanding more tax hikes to fuel more stimulus spending."
The White House meeting takes place a day after Senate Republicans and Democrats blocked each other's competing sequester plans.
After those Senate votes, Obama said that "we can build on the over $2.5 trillion in deficit reduction we've already achieved, but doing so will require Republicans to compromise. That's how our democracy works, and that's what the American people deserve."
The sequester originated as part of a 2011 agreement to break another Obama-Republican budget impasse, raising the debt ceiling.
The idea: Require a series of automatic cuts, split between defense and domestic programs, so onerous that the parties would be force to come up with a plan to cut more than $1 trillion off the debt in ten years.
While the parties have some progress, there has been no major debt reduction deal.
Barring a breakthrough at the White House meeting, Obama will be required by the law to issue a sequestration order by 11:59 p.m.Friday.
The order will specify reductions in various budgets in amounts calculated by the Office of Management and Budget, which would also transmit a report on the cuts to Congress.
How the sequester might play out after Friday, both economically and politically, remains uncertain.
In a speech this week to a group of CEOs, Obama said the sequester "is not a cliff," but more of "a tumble downward."
Many Americans may not feel the effects for months, Obama said, "unless you live in a town that is directly impacted by a military installation, (or) unless you're a family that now is trying to figure out where to keep your kids during the day because you just lost a Head Start slot."
Obama also told the Business Council that the sequester "is going to be a big hit on the economy," and "the worst part of it is it's entirely unnecessary. It's not what we should be doing."