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US trims budget after cuts

- I don’t anticipate a financial crisis, but people will be hurt: Obama

Washington, March 2: Seventeen months after President Obama signed doomsday budget legislation that was never intended to become law, the sweeping spending reductions in the measure have been imposed.

Late last night, Obama formally triggered spending cuts that will reach across the breadth of the federal government after he failed to persuade Congressional Republicans to replace them with a mix of cuts and tax increases.

In a 70-page report to Congress accompanying the order and detailing the reductions — agency by agency and programme by programme — Jeffrey D. Zients, Obama’s budget director, called them “deeply destructive to national security, domestic investments and core government functions”.

But even as the cuts become official, some of the immediate impact is difficult to see.

The process of trimming government budgets is slow and cumbersome, involving lengthy notifications to unions about temporary furloughs, reductions in overtime pay and cuts in grant financing to state and local programs. Less federal money will, over time, mean fewer government contracts with private companies. Reduced overtime for airport security checkpoint officers will make lines longer, eventually.

And so as the first weekend began for the new, slimmer government, little of that is evident yet.

Letters to governors, informing them of the smaller grants are beginning to go out, officials said. Shaun Donovan, the secretary of housing and urban development, wrote to Governor John R. Kasich of Ohio: “You can expect reductions totalling approximately $35 million,” helpfully putting the amount in a bold type.

The Air Force Thunderbirds — the elite team of F-16 pilots who perform tricks at air shows — announced on its website that all of its shows have been cancelled starting April 1. The last show will be in Titusville, Florida, on March 23. Still, it will take some time, officials acknowledged, before the cuts begin to make life more difficult for teachers, defence contractors, Head Start students, border patrol agents or others who rely on the largess of the federal government.

Emerging from an Oval Office meeting yesterday with the lawmakers, the President called the cuts “just dumb”. He said they would slow the economic recovery and spoke emotionally about their impact on people who would feel the consequences of government layoffs and disruptions in public services.

“I don’t anticipate a huge financial crisis, but people are going to be hurt,” Obama said during a 35-minute news conference at the White House, in which he acknowledged that his campaign of highlighting fallout from the cuts had failed to persuade Republicans to consider tax increases as part of a package to avert the $85 billion in reductions over the next seven months.

But the President and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government till September 30, essentially declaring a cease-fire in the budget wars.

The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion. Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion.

 
 
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