WASHINGTON -- Preparing to leap into the fiscal unknown, President Obama and congressional Republicans failed to reach a deal Friday to avert the $85 billion in automatic, across-the-board budget cuts set to begin at midnight.
"These cuts will hurt our economy, they will cost us jobs," Obama said after meeting with congressional leaders for a little less than an hour to discuss what is known as "the sequester."
Obama attributed the "dumb,.arbitrary" cuts to Republican refusal to agree to a new debt reduction plan that includes higher taxes on wealthy Americans through the closing of loopholes and deductions.
House Speaker John Boehner, R-Ohio, said after the meeting that Obama got tax hikes in the January agreement to end the last budget impasse, the so-called fiscal cliff.
"The discussion about revenues in my view is over," Boehner said. "It's about cutting the spending in Washington."
The parties did appear to make progress on avoiding another potential budget standoff down the road -- the March 27 expiration of the continuing resolution that is funding the government; failing to renew it could lead to a budget shutdown.
Boehner said Congress is planning to extend the continuing resolution for funding government past its March 27 expiration date, so that sequester talks will not be clouded by the prospect of a government shutdown.
The president also sounded upbeat about avoiding a government shutdown, saying he would sign an extension provided Congress sticks to budget targets they have used in the post.
Obama said debt reduction should include both spending cuts and higher taxes in the wealthy, calling it a "balanced plan" that can end the cuts that will slow the economy, cost people jobs, and possibly undermine national defense.
The president is expected to sign a formal sequestration order later Friday.
The Senate's top Republican, Mitch McConnell of Kentucky, had said before the meeting that any alternative to the sequester must involve less federal spending, not higher taxes.
"I'm happy to discuss other ideas to keep our commitment to reducing Washington spending at today's meeting," McConnell said. "But there will be no last-minute, back-room deal and absolutely no agreement to increase taxes."
Obama and Vice President Biden met in the Oval Office with a group of congressional leaders that included the top two Republicans, McConnell and Boehner. The top congressional Democrats -- Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif. -- also attended the session.
The meeting took 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. The automatic, across-the-board sequester cuts become official at midnight.
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 revenue 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."
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.
David Jackson/USA Today