No gloom-and-doom scenario for US sequestration

WASHINGTON (Xinhua) - The sweeping US budget cuts slated to kick in on Mar. 1 will have some negative impact, but the gloom-and-doom scenarios painted by both sides of the political divide are unlikely to come to pass, experts said.

The cuts, or sequestration in Washington parlance, were first proposed in 2011 by the White House, but are now panned by President Barack Obama, who warned during Saturday's weekly address that they would stunt the economy.

In turn, Republican Sen. Lindsey Graham billed the cuts as " crippling" to the military, and Defense Secretary Leon Panetta cautioned earlier this week that 800,000 Pentagon employees could be furloughed.

While the Congressional Budget Office said the US GDP growth could slip by 0.7 percent, economists said an all-out recession is unlikely, although the cuts would likely leave the high jobless rate unchanged.  

"It will have a significant impact on the Washington D.C. economy but less in the West and Midwest," said Barry Bosworth, senior fellow at the Brookings Institution and former presidential advisor, of the looming sequester.

The sequester comes amid an ongoing increase in spending, and the cuts amount to $85 billion of a $3-trillion budget.

The Wall Street Journal noted earlier this month that federal domestic spending climbed 84 percent, with some agencies doubling and tripling their budgets, during the president's first two years in the White House. That came on the heels of a 60 percent rise in spending under the George W. Bush administration.

Writing in the National Review, Cato Institute Senior Fellow Michael Tanner noted that even if the sequester goes through, the federal government will spend $2.14 trillion more in 2022 than it does today.

The sequester would reduce the growth in domestic discretionary spending by $309 billion over ten years. But annual spending on these programs will still increase by $90 billion over that period, wrote Tanner.

"Entitlement spending, the fastest-growing portion of the domestic budget will hardly be touched by sequestration. It will continue to increase at the same astronomical rate as before," he wrote.  

Defense spending will indeed decline initially in real terms, but on an inflation-adjusted basis, will never fall below 2007 levels, he contended.

By 2015 it will begin rising again, surpassing 2012 levels - $554 billion - by 2019 and reaching $589 billion by 2021. Overall, annual defense spending will average $540 billion over the next ten years, according to Tanner.  

By comparison, the United States spent, in 2013, an average of just $435 billion per year on defense during the Cold War, when the US faced a greater threat, he argued.  

Still, experts are dumbfounded by what they describe as cuts made with a blunt meat cleaver.  

Bill Frenzel, guest scholar at Brookings and former Congressman, contended the worst feature of the sequester is that it is the " wrong way to reduce spending."

"The cuts are mandated across-the-board in most discretionary spending areas. The good programs will be cut along with the bad," he argued. "The sequester meat-axe slices muscle along with the fat. It is hard to believe that allegedly smart people could have agreed to such a device."

Echoing those thoughts, Bosworth said, "it is an absurd way to going about cutting the deficit, but I do not see an acceptable alternative that would avoid it."

In his weekly address Saturday, Obama pressed Republicans to compromise on the cuts, arguing that slashing the budget would " eliminate good jobs" and "leave many families stretched to the limit scrambling to figure out what to do."

Experts said the chances of a bipartisan deal on avoiding or rolling back the cuts look slim, adding that Republicans feel they need to stand firm on the sequester if they are to be taken seriously on reigning in the country's massive deficit spending.