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WASHINGTON: Huge spending cuts will start to hit the US military and a vast array of other government programs on Saturday after President Barack Obama and congressional Republicans failed to find a compromise that would have blocked the $85 billion budget reduction, a move designed to whittle away at the country's enormous debt but one that could threaten the still-weak economy.

Both Obama and the Republican leaders in the House and Senate declared themselves still deadlocked after a last-minute White House meeting on Friday. The two sides are at odds over the president's insistence on increasing tax revenue as part of any plan for attacking the country's $16.6 trillion indebtedness.

Obama signed an order authorizing the cuts Friday night, officially enacting the across-the-board reductions. Under the law, he had until midnight.

Obama and the Republican leadership have been battling over that issue since the opposition party regained a majority in the House of Representatives more than two years ago. The crude, across-the-board budget reductions were conceived in 2011 to be so unattractive that both sides would be forced to find a better deal. They haven't despite two years to find a compromise.

The $85 billion in cuts apply to the remainder of the 2013 fiscal year, which ends September 30. But the legislation that requires the spending reduction will continue slashing government spending by about $1 trillion more over a 10-year period.

"Let's be clear. None of this is necessary," the president said after the White House meeting. "It's a choice Republicans in Congress have made" to avoid to closing tax loopholes that benefit the wealthy. He said "the pain will be real" for the American people, but he added that the cuts aren't "the apocalypse, they're just dumb."

Republican John Boehner, speaker of the House of Representatives, walked out of the meeting to say there would be no compromise as long as Obama insisted on higher tax revenue. Republicans are standing fast against further increasing taxes and will not compromise on achieving debt reduction through spending cuts alone. The opposition party is still feeling the sting from its most conservative members after agreeing at the end of 2012 to allow the expiration of Bush-era tax cuts for Americans earning $400,000 or more a year.

Friday's meeting was the first the two sides have held this year on the budget battle, and it lasted less than an hour. Asked whether he couldn't get the parties in a room and stay there until they reach a deal, Obama said, "I can't have Secret Service block the doorway."

The cuts are just the first of a series of budget crises that will confront Congress and the White House in the coming weeks.

Next is 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.

Obama and the Republicans indicated a willingness to find common ground on that issue.

Boehner said the House will pass legislation next week to extend routine funding for government agencies beyond the current March 27 expiration. "I'm hopeful that we won't have to deal with the threat of a government shutdown while we're dealing with the sequester at the same time," he said, referring to the new spending cuts by their Washington-speak name.

Obama said he, too, wanted to keep the two issues separate.

In May, 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.

The immediate impact of the spending cuts on the public was uncertain.

The Pentagon will absorb half of the $85 billion required to be sliced between now and the end of the budget year on Sept 30, exposing civilian workers to furloughs and defense contractors to possible cancellations. Said defense secretary Chuck Hagel, only a few days on the job: "We will continue to ensure America's security" despite the challenge posed by an "unnecessary budget crisis."

The administration also has warned of long lines at airports as security personnel are furloughed, of teacher layoffs in some classrooms and adverse impacts on maintenance at the nation's parks. One military aircraft carrier's tour of duty to the Persian Gulf has been delayed.

The Homeland Security Department released from its jails more than 2,000 illegal immigrants facing deportation in recent weeks due to the looming budget cuts and planned to release 3,000 more during March, according to newly disclosed figures, cited in internal budget documents reviewed by The Associated Press.

The president told reporters the effects of the cuts would be felt only gradually.

"The longer these cuts remain in place, the greater the damage to our economy — a slow grind that will intensify with each passing day," Obama said. Much of the budget savings will come through unpaid furloughs for government workers, and those won't begin taking effect until next month.

It isn't clear how long the cuts will last.

Of particular concern to lawmakers in both parties is a lack of flexibility in the allocation of cuts due to take effect over the next few months. That problem will ease beginning with the new budget year on Oct. 1, when Congress and the White House will be able to negotiate changes in the way the reductions are made.

For his part, Obama suggested he was content to leave them in place until Republicans change their minds about raising taxes by closing loopholes.

Many conservatives are willing to accept the cuts as the only way to reduce government spending, even though the budget knife cuts into cherished defense programs.

source: timesofindia

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