Sat, Mar 02, 2013 - Page 1 News List

US lurches toward austerity with harsh budget cuts

AP, Washington

Sweeping US government spending cuts totaling US$85 billion were to begin taking effect yesterday, slicing deeply into military and other programs in an unwanted move toward austerity that displays Washington’s paralyzing partisan divisions.

A White House spokesman said the cuts would be put into force as close to midnight as possible because US President Barack Obama was “ever hopeful” on a deal to avoid them.

Obama was meeting congressional leaders of both parties yesterday, but there were no expectations of a breakthrough.

The cuts are kicking in after the White House and congressional Republicans could not overcome bitter disagreements and come up with a better plan to tackle the country’s US$11.7 trillion debt. The warring sides have spent this week assigning blame rather than seeking a way out.

The automatic spending reductions are part of a law passed two years ago and designed to be so off-putting to both Democrats and Republicans as to force a compromise. It has not worked.

The immediate impact of the cuts on the public was uncertain. They would carve 5 percent from domestic agencies and 8 percent from the Pentagon between now and Oct. 1, but would leave several major programs alone, including the Social Security pension program, the Medicaid healthcare program for the poor and food stamps.

However, the cuts are just the first of a series of budget crises that will confront Congress and the White House before summer.

Yesterday’s talks will look past the automatic spending cuts to the next looming fiscal fight: a possible government shutdown. The annual ritual of passing agency spending bills collapsed entirely last year, and Congress must act by March 27 to prevent the partial shutdown.

Then, in April, Congress will confront a renewed standoff on increasing the government’s borrowing limit — the same the issue that, two years ago, spawned the law forcing the current spending cuts in the first place.

Failure to raise the borrowing limit could force the US to default on debt for the first time in history.

Agency leaders for weeks have warned what would happen when the cuts take effect: The busiest airports could close some runways, causing widespread flight delays and cancellations. Hundreds of illegal immigrants have already been freed from jail across the country. One military aircraft carrier’s tour of duty to the Persian Gulf has been delayed.

Democrats on Thursday thwarted a Republican proposal that would have required Obama to propose alternative cuts that would cause less disruption in essential government services. Moments later, a Democratic alternative to spread the cuts over a decade and replace half with higher taxes on millionaires and corporations met the same fate.

In a written statement after the votes, Obama lambasted Republicans.

“They voted to let the entire burden of deficit reduction fall squarely on the middle class,” he said.

US House Speaker John Boehner, the top Republican in Congress, responded: “Obama and Senate Democrats are demanding more tax hikes to fuel more ‘stimulus’ spending.”

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