The deadline for Congress to prevent yet another fiscal crisis is upon us.
On Friday, $85 billion in automatic spending cuts are set to take effect if our elected officials fail to act. Over the next decade, a total of $1.2 trillion in government cuts to both domestic and defense spending are expected to impact the U.S. economy. This is the sequestration process that was agreed to two years ago, which was supposed to be headed off before reaching this point, as The Daily Ticker Henry Blodget details in the accompanying clip with Yahoo! Finance senior columnist Michael Santoli.
On Sunday, The White House released a new state-by-state report detailing the "devastating impact the sequester will have on jobs and middle class families across the country if Congressional Republicans fail to compromise to avert the sequester by March 1st."
Here are some details:
- California would lose $87.6 million for primary and secondary education, putting roughly 12oo jobs at risk.
- Ohio would lose about $6,865,000 in environmental funding to ensure clean water and air quality, as well as prevent pollution from pesticides and hazardous waste.
- In Florida around 7,450 fewer children will receive vaccines for diseases such as measles, mumps, rubella, tetanus, whooping cough, influenza, and Hepatitis B due to reduced funding for vaccinations of about $509,000.
- In New York, approximately 12,000 civilian Department of Defense employees would be furloughed, reducing gross pay by around $60.9 million in total. Army: Base operation funding would be cut by about $108 million in New York.
- Illinois will lose about $587,000 in Justice Assistance Grants that support law enforcement, prosecution and courts, crime prevention and education, corrections and community corrections, drug treatment and enforcement, and crime victim and witness initiatives
Those details aside, Santoli does not think the economic and market impact will be all that harsh because the country has been bracing for the impact for months.
"Broadly for the economy and the markets, we've been living with this threat for so long we've almost been able to sort of rationalize," he says.
What, in fact, could have a bigger economic impact is the next deadline looming March 27, when the U.S. government faces a government shutdown. If Congress does not pass a new federal budget or continuing resolution by that time the government will not have the funds to operate.
The Wall Street Journal reports, Congress has given already given up on Friday's deadline and is looking ahead to avert Washington going dark.
"Senior aides to House Speaker John Boehner (R., Ohio) and Senate Majority Leader Harry Reid (D., Nev.) have begun discussing a bill being prepared by House Republicans to fund government operations through September," writes WSJ reporter Janet Hook. "Republicans want the bill to extend operating funds at the lower levels set to kick in Friday and to give more flexibility to the Pentagon to manage its cuts."
Watch the video for more insight and analysis.
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