WASHINGTON, March 2: Drastic budget cuts became effective in the United States on Saturday, hours after President Barack Obama signed an order initiating $85 billion in “sequester” reductions.
The president signed the order late on Friday night after he and congressional leaders failed to reach an agreement for avoiding across the board budget reductions.
These mandatory budget cuts for reducing government spending will also reduce US defence budget by $46bn. US military and economic assistance to other countries will also be affected.
“This is not a win for anybody,” President Obama told reporters after an hour-long meeting with the lawmakers. “This is a loss for the American people.”
Mr Obama said the automatic federal spending cuts will go into effect, although “not everyone will feel the pain … right away. The pain, though, will be real,” he said.
“I don't anticipate a huge financial crisis, but people are going to be hurt.”
The White House also issued a 70-page report with the order detailing agency by agency and programme by programme impact of the cuts House Speaker John Boehner, a Republican, said after the lawmakers’ meeting with Mr Obama that the House would take up a bill next week to fund the government past March 27, when the congressional authorisation expires.
“I'm hopeful that we won't have to deal with the threat of a government shutdown while we're dealing with the sequester at the same time,” Mr Boehner said.
“The House will act next week, and I hope the Senate will follow soon.”
Besides Mr Boehner, Senate Republican leader Mitch Connell, House Democratic leader Nancy Pelosi, and Senate Democratic leader Harry Reid also attended the meeting. Vice President Joe Biden assisted President Obama.
President Obama said after the meeting he would still push for a sequester replacement.
The cuts, which will run through the end of the 2012 fiscal year in September, are the first of a decade-long plan to cut a spending of $1.2 trillion from the federal budget.
Mr Obama’s failure to reach an agreement with the Republicans indicate that the confrontation between Republican and Democratic lawmakers will further escalate.
The Republicans are now demanding greater reductions in government expenditure and want the administration to reduce medical and other assistance provided to needy citizens.
They also want an across the board increase in taxes, including on those earning less than $6000 a month. This goes against President Obama’s election pledge to increase revenues by taxing the rich while giving greater concessions to the poor.
The sequester will also affect hundreds of schools that receive federal assistance and force some to close programmes aimed at helping handicapped children.