By Jeff Mason
WASHINGTON (Reuters) - President Barack Obama will propose on Tuesday that the Congress pass a small package of spending cuts and tax reforms that would delay the larger, automatic "sequester" cuts from going into effect and give Washington more time to agree a broader budget deal.
Huge cuts to defense and domestic programs are slated to go into effect in roughly three weeks, a threat that has caused uncertainty and could hurt economic growth.
Obama welcomed efforts in the House of Representatives and the Senate to come up with a budget that would address the U.S. fiscal challenges, but time is short to get that done, a White House official said.
"Given that the budget process in Congress won't likely be completed by March 1st, the president on Tuesday will call on Congress to pass a smaller package of spending cuts and tax reforms to avoid the economically harmful consequences of the sequester for a few months," the official said.
This would "allow Congress more time to reach a solution that permanently avoids the sequester and significantly reduces the deficit in a balanced way," she said.
Obama will speak at 1:15 p.m. EST (1815 GMT).
The White House and Congress agreed a deal at the beginning of this year that avoided the "fiscal cliff" of spending cuts and tax increases by raising tax rates on households making more than $450,000 a year.
The deal put off the huge spending cuts for two months, however, and Obama is eager to give both sides more time to resolve that issue.
If launched on March 1, the cuts would reduce federal spending across the board by about $85 billion, split evenly between military and domestic programs. The total through 2022 would be about $1.2 trillion.
The Republican-controlled House last year passed two measures that sought to replace the sequester cuts and shield military spending by shifting the burden onto domestic programs, including many that serve the poor, such as Medicaid, food stamps and social services block grants that fund programs like Meals on Wheels. The measure was never taken up in the Democratic-controlled Senate.
Republican House Speaker John Boehner said the sequester policy stemmed from Obama.
"President Obama first proposed the sequester and insisted it become law," he said in a statement.
"We believe there is a better way to reduce the deficit, but Americans do not support sacrificing real spending cuts for more tax hikes. The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years."
(additional reporting by Mark Felsenthal, Steve Holland and David Lawder; Editing by Mohammad Zargham)
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