President Says Sequestration’s Automatic Spending Cuts “Will Not Happen”
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“It will not happen.”
That's what President Obama declared at the third Presidential debate on the topic of “sequestration,” automatic spending cuts set to take effect starting January 2013. However, after the debate, the President’s advisers stepped back from that definitive statement [see the Fox News clip above].
This chart from the Heritage Foundation illustrates how the cuts are spread out across the federal budget. As you can see entitlements, a huge part of total federal spending, only make up less than 15% of the cuts, while the defense budget, a smaller part of federal spending takes up 42.6% of the total sequestration cuts.
These defense cuts will hurt small and medium-size businesses that are part of defense supply chains, and when combined with the largest tax increase in U.S. history as part of the “fiscal cliff,” it could push the economy into a recession.
For months, the U.S. Chamber has urged Congress and the White House to 1) extend current tax rates and tax provisions and find alternative cuts; then 2) develop comprehensive tax reform to promote economic growth and spending reform to address deficit spending and rising entitlement spending. Learn more at the U.S. Chamber's Fiscal Cliff Countdown website.
I hope the President’s words mean the administration has a plan to replace the scheduled cuts with alternatives or wants to make a deal with the lame-duck Congress post-election. The business community is waiting for Washington to act.