UPDATE 2-White House: nothing new in Obama's comment on automatic cuts

David Lawder

* Spokesman says remark reflects long-held position

* Republicans ask whether Obama has any viable plan

* ``Most significant statement'' in the debate - analyst

WASHINGTON, Oct 23 (Reuters) - The White House said on Tuesday that there was nothing new in President Barack Obama's unqualified remark that automatic spending cuts looming in January ``will not happen.''

Obama's comment, made during his debate on Monday night with Republican presidential nominee Mitt Romney, has set off speculation that the president is aware of a new development or perhaps planning to take a significant step himself to halt the cuts.

But Jay Carney, the president's press secretary, said it was only a restatement of his long-held position that the cuts were ``never meant to be implemented'' and that Obama is confident Congress will avoid them.

Obama was addressing charges by Romney that the sequester - the automatic, across-the-board reductions - was his administration's idea.

``First of all, the sequester is not something that I've proposed,'' he said. ``It is something that Congress has proposed. It will not happen.''

Obama did not say whether he had a specific plan in mind to avoid the $109 billion in cuts due to start on Jan. 2, or if he was merely hopeful Congress would act.

The reductions, to be divided equally between defense and non-defense programs, are part of the so-called ``fiscal cliff'' of cuts and tax increases set for the end of the year that the Congressional Budget Office has said could lead to a recession.

Before Carney spoke, Democrats said the comment showed Obama's determination to push an alternative deficit-reduction plan in the post-election session of Congress to replace the automatic cuts.

``The president made it very clear. It's not going to occur, he's not going to let it occur,'' said Representative Gerald Connolly, a Democrat whose northern Virginia district is home to thousands of defense and other government workers who could face layoffs.

Carney said the threat of automatic cuts was meant as a ``forcing mechanism'' to push Congress to take a balanced approach to shrinking deficits, including raising revenues.

``The president is confident that Congress will take the appropriate action in order to achieve a balanced deficit-reduction package in order to avoid these onerous cuts in both defense and non-defense discretionary spending,'' he added.


A spokesman for Senate Republican Leader Mitch McConnell said: ``We were all surprised by the president saying that the sequester 'will not happen' given that he still hasn't presented a plan to make sure it 'will not happen.'

''While the Republican-led House (of Representatives) has already taken action, Democrats in the Senate haven't even passed a budget, and the president has presented no plan to prevent the defense cuts,`` the spokesman said.

Kevin Smith, a spokesman for House Speaker John Boehner, said: ''For the past year, the president has refused to show any leadership in resolving the sequester he proposed, so forgive us if we have doubts about his newfound desire to tackle the issue.``

Democrat Connolly said Obama would be foolish to release specifics of his plan in the ''toxic`` pre-election environment.

''If you're concerned about the sequestration, the re-election of the president is the best dynamic we have because a re-elected President Obama in a lame-duck session of this Congress will have the upper hand,`` he said.

A lame-duck session occurs after the election but before the newly chosen lawmakers take office in January and includes members who were defeated in November.

Analyst Greg Valliere of Potomac Research Group called Obama's remark ''the most significant statement in last night's debate.``

''The president said a budget sequester 'will not happen.' This is the clearest indication yet that the fiscal cliff may be finessed or delayed,`` he said.

Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut, said the president's comment could mean that there will not be ''grand cuts`` in January.

''I think that one would be advised to interpret it as not meaning that they won't happen, but that they won't happen on the first of the year,`` he said.

Marion Blakey, president of the Aerospace Industries Association, urged Congress and the White House to name a small team of experts to hammer out a plan to avert sequestration immediately - and not wait until after the Nov. 6 election.

''If the conviction is there, then we've got to have the specifics, the actual language for the legislation developed ... so it's ready to go when they come back,`` she said.