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United States braced for swingeing sequester of €85bn budget cuts

Analysts say that the cuts, due to come into force overnight, will take a number of months to take effect and will see growth fall by as much as 0.7 per cent.

President Barack Obama and Speaker of the House John Boehner in Washington this week
President Barack Obama and Speaker of the House John Boehner in Washington this week
Image: J. Scott Applewhite/AP/Press Association Images

THE UNITED STATES was braced for $85 billion (€65 billion) in budget cuts due to hit later today in a self-inflicted wound brought on by deep ideological antipathy between President Barack Obama and Republicans.

The cuts, which could cost a million jobs, will slice public services and threaten an economy that is already barely growing, and arrive with both sides agreeing on only one thing — that the other is to blame.

The hit to military and domestic spending, known as the sequester, was never supposed to happen, but was rather a doomsday device seen as so punishing that rival lawmakers would be forced to find a better compromise to cut the deficit.

But such is the dysfunction in gridlocked Washington that neither side tried very hard to get a deal, with Obama calling for tax revenue hikes on the wealthy and corporations — a demand Republicans flatly refused.

“Instead of closing a single tax loophole that benefits the well-off and well-connected, (Republicans) chose to cut vital services for children, seniors, our men and women in uniform and their families,” Obama said.

“They voted to let the entire burden of deficit reduction fall squarely on the middle class,” said the president, who has mounted a campaign-style blitz to leverage public opinion against Republicans on the issue.

Last-ditch effort

Obama is required by law to order the budget sequester by 11.59 pm (4.59am GMT) tonight, and the cuts are all due to be made by the end of the year unless a political deal can be reached.

He has called top Republican and Democratic leaders to the White House for a last-ditch effort to bridge the gaps on Friday, but few people in Washington believe the meeting is much more than a photo-op.

Republicans, who lost a showdown on raising tax rates on the rich late last year, have refused to accept any revenue raises — part of the “balanced” solution, also involving targeted spending cuts, that the president wants.

“We’ve laid our cards on the table,” Republican House speaker John Boehner said, explaining why his chamber would take no further action until the Democrat-controlled Senate does.

John Cornyn, the number two Senate Republican, said Obama and Democrats had overstated “apocalyptic predictions” of the impact of the sequester.

“They are predicting a disaster that will not occur,” Cornyn said.

The White House yesterday admitted it would take time for the full impact of the sequester to be felt, as government workers get furlough notices and services, like education for special needs kids, are put at risk.

“You cannot responsibly cut $85 billion out of the budget in seven months without having … dramatic effects on the defense industry and civilian workers, on our national security readiness, on teachers,” White House spokesman Jay Carney said.

Going through the motions yesterday, senators failed to advance two bills — one Democratic, one Republican — to avert the sequester.

Mandatory furlough

The best hope for a deal now lies in the parallel negotiations on a new bill to cover funding for government operations for fiscal year 2013 that must be completed by the end of March.

That bill may be the top focus of talks between Obama, Boehner, Republican Senate Minority Leader Mitch McConnell and the top Senate and House Democrats Harry Reid and Nancy Pelosi in the Oval Office today.

The White House has warned that the indiscriminate cuts are written into law in such a way that their impact cannot be alleviated.

It warns that 800,000 civilian employees of the Defense Department will go on a mandatory furlough one day a week and the navy will trim voyages. The deployment of a second aircraft carrier to the Gulf has been canceled.

About 70,000 children less than five years old will be cut from the Head Start preschool program, resulting in the elimination of 14,000 teaching positions. Services for special needs kids will also take a hit.

Authorities warn that average wait times for passengers at US immigration will increase by 30-50 percent and may exceed four hours during peak times.

Security lines will also grow longer as the Transportation Security Administration enacts a hiring freeze, eliminates overtime and furloughs 50,000 employees.

The National Institutes of Health and other federally-funded scientists will have to delay or halt research and the Food and Drug Administration will conduct 2,100 fewer inspections, escalating the risk of food-borne illnesses.

The Bipartisan Policy Center in Washington estimates that one million jobs could be lost, and the Congressional Budget Office predicts growth could slip 0.7 per cent.

- © AFP, 2013

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