Budget cuts coming as US Congress fails to reach compromise | Connect Asia

Budget cuts coming as US Congress fails to reach compromise

Budget cuts coming as US Congress fails to reach compromise

Updated 25 February 2013, 16:40 AEDT

Barring a last minute deal, 85 billion dollars in federal spending is set to be slashed from the US budget at the end of the week.

As a result, Federal workers will be forced to take unpaid leave, a lot of air travel will be suspended, and some military deployments will be disrupted.

The reason?

Republicans and Democrats have been unable to reach agreement on how to rein in the country's deficit.

Correspondent: Jane Cowan

Speakers: Barack Obama, US President; Byron York, chief political correspondent, Washington Examiner; Donna Brazile, Democratic strategist

JANE COWAN: It's been likened to taking a meat cleaver to the US budget. In five days' time $85 billion, or 2.4 per cent of spending, will have to go.

Worst hit would be the Defence Department and the US president Barack Obama is warning of dire consequences.

BARACK OBAMA: The threat of these cuts has forced the navy to delay the deployment of an aircraft carrier to the Persian Gulf, affecting our ability to respond to threats in an unstable part of the world.

And just this week the Pentagon announced that if these cuts go through almost 800,000 defence employees - the equivalent of every person in Miami and Cleveland combined - will be forced to take an unpaid leave.

JANE COWAN: The cuts will cascade through the government, affecting all discretionary spending, from the funding that sees snow cleared from mountain passes in Yosemite National Park to grants for health research, subsidies for clean energy projects, school construction, food safety inspection and food aid for low income families.

The transportation secretary Ray LaHood is also warning flights to major cities could be delayed by an hour and a half because air traffic controllers will have to be stood down.

If not reversed, the cuts would eventually see federal discretionary spending fall to a five decade low. Opinion is divided about how disastrous the cuts would actually be.

Byron York is chief political correspondent for the Washington Examiner.

BYRON YORK: The cabinet departments really do have more flexibility in dealing with some of these cuts than they're saying. And it doesn't mean people have to be laid off, it doesn't mean that they have to be furloughed. The cabinet secretaries have more authority to move money around.

JANE COWAN: For Americans there's a sense of deja vu, that this is just the latest instalment in what's become a process of government by perpetual crisis.

The seeds of the "sequester", as it's called, were sown in 2011 as part of a deal to win Republican support for increasing the government's statutory borrowing limit.

Back then both parties agreed to this series of automatic spending cuts as a way to ensure deficits would be slashed even if Congress failed to do so.

The point was to make the cuts so arbitrary, widespread and undesirable as to be unpalatable to both sides.

Democratic strategist Donna Brazile:

DONNA BRAZILE: Well the sequester was always meant to force a compromise, a compromise and a balanced way of spending cuts as well as revenues. It was not intended to shut down the government.

JANE COWAN: But in a political system still hopelessly polarised, a comprehensive deal to reduce the US deficit in a controlled way appears to be all but impossible.

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