government spending cuts
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Automatic Spending Cuts: What's Set to be Slashed
There was short-term optimism about the U.S. economy after the fiscal cliff deal, but there's still a looming problem for this year that can't be avoided: automatic spending cuts to government programs.
Because Congress did not reach an agreement on them, the automatic spending cuts - known as sequestration - are now delayed until March. Lawmakers will meet in March to try and restructure the cuts.
As of now, the cuts equal $1.2 trillion in savings over 10 years. If nothing is done, there will be across-the-board preprogrammed reductions in a number of government programs, with the defense industry being hit the hardest with $55 billion.
For lawmakers wielding the knife, deciding where to slash budgets is tricky. If there are too many reduction-related layoffs, the automatic cuts could kick the nation back to a recession.
Here's a breakdown of what will be cut if Washington does nothing and lets the sequester go through as planned.
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What Automatic Spending Cuts Would do to U.S. Defense Industry
The looming automatic spending cuts would include a major hit to the U.S. defense industry, slashing $500 billion from the Pentagon budget over 10 years.
The cuts, known as sequester, would result from a law enacted in summer 2011 following Congress' failed attempt to find a balanced way to trim federal spending. Policymakers in Washington sought to resolve the issue again in December after elections, but the only thing agreed upon then was a two-month extension.
With talks set to resume on March 1, expectations have dimmed among senior defense officials that U.S. President Barack Obama and Congress will succeed in mapping out an all-encompassing deficit-reduction plan before the massive spending cuts envelope the country.
As a result, the Defense Department is prepping to ground military aircraft and radio ships back to port should the substantial cuts come.
Reductions in ship and pilot training, flying hours and equipment maintenance would also have to be implemented. Plus, civilian hiring freezes, travel halts and a decrease to base spending are all expected.
The uncertainty surrounding what's ahead has brought widespread concern. U.S. Defense Secretary Leon Panetta voiced his unease during a recent Pentagon briefing.
"(We) have no idea what the hell's going to happen. All told, this uncertainty, if left unresolved by the Congress, will seriously harm our military readiness," Panetta said.
