By Nick Mann | 17 September 2012
The $109bn package of spending cuts due in January unless US political parties can agree alternative deficit reduction plans will have a ‘devastating’ impact on government programmes, White House budget advisers have warned.
The automatic cuts will take place along with tax increases in a combination known as the ‘fiscal cliff’. In a report submitted to the US Congress on Friday, the Office of Management and Budget said the cuts – known as sequestration – would be ‘deeply destructive’ to national security, domestic investments and core government functions.
Discretionary defence funding would be reduced by 9.4% and non-defence discretionary funding by 8.2%, the report said, while Medicare would face a 2% reduction.
The fiscal cliff will kick in on January 1 2013 unless the US Congress can reach agreement on how spending cuts of $1.2 trillion should be made between 2013 and 2021. The Congressional Budget Office warned last month that this would send the US into recession.
In its report, the OMB said that while the US defence department would be able to ensure its combat and military readiness capabilities were not degraded by the cuts, the readiness of un-deployed units would be affected.
The sequestration would also lead to delays in investments in new equipment and repairs as well as cuts in research and development and in services for military families.
In terms of its impact on non-military spending, it would ‘undermine investments vital to economic growth, threaten the safety and security of the American people, and cause severe harm to programmes that benefit the middle class, seniors, and children’.
Education grants for afterschool programmes and to support disabled children would suffer, while areas such as air traffic control and environmental protection would also be ‘degraded’. Research into diseases, responses to terrorism and ‘critical’ housing and food-assistance programmes for low-income families would be hit, it added.
‘No amount of planning can mitigate the significant impact of the sequestration,’ the report said.
‘The destructive across-the-board cuts required by the sequestration are not a substitute for a responsible deficit reduction plan.
‘The president has already presented two proposals for balanced and comprehensive deficit reduction, but under our constitution, he cannot do the job alone. Congress also needs to act.’
It added: ‘The administration remains ready to work with Congress to enact a balanced plan that achieves at least the level of deficit reduction agreed to in the Budget Control Act, and cancels the sequestration.’
