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Automatic budget cuts went into effect this week, threatening to adversely impact the economy in a number of ways.
The cuts were part of the debt ceiling deal President Obama struck with Republicans in 2011. The cuts were thought to be such bad policy that politicians would eventually come up with something else. They didn't.
The Huffington Post reported that the cuts amount to $1.2 trillion over the next 10 years and $85 billion for the remainder of fiscal year 2013. A dramatic reduction in spending is likely to hinder an economic recovery just taking hold.
"The inopportune moment of sequestration — hitting just as the economy shows bright spots — will create a drag on the economy in a slow-motion manner. First, the furlough notices will go out in March to federal employees, the majority of whom live outside of the Washington metro area. Unemployment checks will drop as early as April for the long-term unemployed who receive the federal benefit checks," according to the National Journal.
We have attached a video on this so-called 'sequester' to this post.
