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Obama Okays $ 85 Bn (Re. 467500 Cr) Spending Cuts; Secular Impact Likely

MARCH 03, 2013

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Massive spending cuts will begin hitting the US military and other government programmes as Prez Barack Obama and the Republicans have failed to agree on blocking the $ 85 billion budget cut. Obama has authorized the cuts to implement the across-the-board reductions.



Both Obama and the Republicans were still deadlocked after a last-minute White House meeting. The two sides are at odds over Obama’s insistence on increasing tax revenue as a part of any plan to resolve the $16.6 trillion debt.

The $85 billion cuts apply to the rest of the fiscal year, which ends on September 30. But the law requires the  cuts to continue slashing spending by about $1 trillion more over a decade.


In May, the Congress will face a deadlock over increasing the government's borrowing limit — the issue that had spawned the law forcing the current spending cuts. Any failure to raise the borrowing limit could force America to default on its debt repayment obligations for the first time ever.



The Pentagon is to absorb half of the $ 85 billion to be split between now and the budget year-end on Sept 30. It runs the risk of workers getting furloughs and defense contractors facing possible cancellations. People have been warned of long queues at airports as security personnel are sent on furlough, of teacher layoffs in some classes and adverse impacts on park maintenance.


The Homeland Security Department has released more than 2,000 illegal immigrants from jail due to the budget cuts and plans to release 3,000 more.


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