Obama: US cannot 'cut our way to prosperity'

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Criticizing GOP calls for spending cuts, he added: “We can't just cut our way to prosperity.”

Obama said proposals he made to reduce entitlement benefits in talks in December with Speaker John Boehner (R-Ohio) “are still on the table.” Obama agreed in those talks to change the way costs would be adjusted for inflation in government programs, including Social Security and Medicare.

Obama acknowledged that the full budget may not be ready by March 1, so he urged Congress to pass a smaller package of spending cuts and tax changes to delay sequestration.

The across-the-board automatic cuts known as the sequester were set up in the August 2011 debt-ceiling deal as a way to force Congress to come up with a long-term deficit plan.

Both Republicans and Democrats have decried the cuts, saying they should be avoided. But the threat of the sequester has failed to get the two parties to agree to a plan, and there has been growing resignation in recent weeks that the cuts will actually be implemented.

For more on Obama's remarks, click here.