Automatic spending cuts more likely now

CNNMoney

Tuesday, January 29, 2013

Chances are growing that the automatic, across-the-board spending cuts that no one thought would ever happen may soon take effect.

The sequester, as it’s called, aims to reduce deficits by $1.2 trillion over a decade, including interest savings. The fiscal cliff deal brokered over New Year’s postponed its start date to March 1 from Jan. 2.

The cuts will slash how much federal agencies are allowed to spend by $85 billion over seven months…

When Congress first agreed to the sequester — as a part of a last-minute deal to end the debt ceiling fight in 2011 — it was considered to be such bad policy that it would force both parties to agree to a much smarter deficit reduction plan.

But they didn’t. Some think if the sequester takes effect, it would only be temporary.

Steve Bell, the economic policy director of the Bipartisan Policy Center, is not among them. Even though both parties can find a lot to dislike about the sequester, they also don’t want to give it up for something they fear could be worse, he noted.

2013-01-29 00:00:00
CNNMoney