US hit by deep spending cuts

Washington : With no deal in sight, President Barack Obama signed an order hours before the midnight deadline to kick in $85 billion in what he called “dumb” spending cuts that could hurt the US economy.

Called ‘sequestration’, the cuts — $85 billion in spending cuts this year and $1.2 trillion through fiscal 2021 — were part of an August 2011 deal deliberately designed to be too painful to make the Congress act on the nation’s mounting deficit.

Yet both Obama and opposition Republican leaders chose to instead trade blame as they failed to arrive at a compromise to avert the harshest impacts even on the final day Friday with a 45-minute White House meeting with congressional leaders from both parties.

After weeks of campaign-style events dubbed scare mongering tactics by critics, Obama Friday sought to temper his description of the cuts’ impact even as he blamed Republican intransigence for the failure to reach a deal.

“We will get through this,” he told reporters at the White House. “This is not going to be an apocalypse as some people have said. It’s just dumb and it’s going to hurt.”

Still, a White House budget office report sent to Congress and released with Obama’s order said the cuts would be “deeply destructive to national security, domestic investments, and core government functions”.

The action was described in the report as “a blunt and indiscriminate instrument” that was “never intended to be implemented and does not represent a responsible way” for the country to realise deficit reduction.

The cuts amount to roughly 9 percent for a broad range of non-defence programmes and 13 percent for defence over the rest of the current fiscal year ending Sep 30.

Republicans in Congress “allowed these cuts to happen because they refuse to budge on closing a single wasteful (tax) loophole to help reduce the deficit”, Obama said.

On the other hand, House Speaker John Boehner and other Republicans said the president and Democrats have yet to propose a serious plan to reduce spending to bring chronic federal deficits and debt under control.

The influential New York Times blamed the House Republicans saying they “were elated this week when their leader, John Boehner, made it clear that deep, automatic spending cuts would begin as scheduled on Friday. Incredibly, some consider the decision a victory”.

Noting that “as the cuts take effect, they will inflict widespread hardship”, it asked: “Why are the Republicans so happy when they should be ashamed?”

Meanwhile, a new Gallup poll found that Americans are more likely to describe the sequester negatively with 44 percent using negative words and phrases such as “bad”, “disaster,” and “God help us.”

Only 11 percent responded in a positive light calling the sequester “good”, among other things. About a quarter (24 percent) responded neutrally, while 22 percent either said nothing or offered no opinion.