Post date: Feb 25, 2013 11:35:41 PM
Reuters Business Video Report - The term sequestration has been floating around for some time. But its actual impact, the massive $85 billion in spending cuts, is becoming real as the clock ticks to Friday.
Among the hardest and earliest to be hit: government workers- and their communities.
Ken Simonson is the President of the National Association for Business Economics: KEN SIMONSON, PRESIDENT, NATIONAL ASSOCIATION FOR BUSINESS ECONOMICS :
"I think there will be a big impact on retail spending and consumer services wherever you have a high concentration of Federal workers and that would include civilian workers at military bases around the country, certainly communities that depend on national parks."
In dollars a cents here is a breakdown of some of the industries and sectors that will be hit the hardest:
Defense and aviation see cuts of almost $43 billion
And then there's domestic discretionary- areas like primary and secondary education and law enforcement resources.
Medicare is looking at more than $9 billion.
And the rising housing sector could also be hurt- because of its ties to construction.
KEN SIMONSON, PRESIDENT, NATIONAL ASSOCIATION FOR BUSINESS ECONOMICS:
"Our analysis shows $4 billion being taken out of Federal funding for construction projects starting right away. So that would be a lot of construction workers would either be thrown out of work or the companies would have to absorb those cuts in Federal spending. "
In terms of where it will hit, an analysis by Wells Fargo Securities Economics Group last week found that under sequestration, states close to the nation's capital and in the South will be hardest hit.
President Obama warned of the consequences:
U.S. PRESIDENT BARACK OBAMA :
"Unfortunately, in just four days, Congress is poised to allow a series of arbitrary, automatic budget cuts to kick
in that will slow our economy, eliminate good jobs, and leave a lot of folks who are already pretty thinly stretched scrambling to figure out what to do."
Republican House Speaker John Boehner fired back:
JOHN BOEHNER, SPEAKER OF THE U.S. HOUSE of REPRESENTATIVES:
"The President says we have to have another tax increase to avoid the sequester. Well, Mr. President, you got your tax increase. It's time to cut spending here in Washington."
If the sequestration takes effect on Friday, it would slash spending by nearly $1 trillion over nine years.