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No deal in sight on eve of U.S. sequester deadline

By Matthew Rusling (Xinhua)

20:02, March 01, 2013

WASHINGTON, Feb. 28 (Xinhua) -- The White House has not cut a deal with Republicans in Congress to avert a sweeping spate of budget cuts known in Washington as the "sequester," on the eve of the March 1 deadline.

The cuts were first proposed in 2011 by the White House, but are now panned by President Barack Obama, who warned they would lead to economic Armageddon, although he has toned down that rhetoric in recent days, downgrading the gloom-and-doom assessment to an economic slide.

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

Republican strategist Ford O'Connell said he believed the sequester would go through.

"The only question is how long it lasts. I don't envision it lasting more than a couple of months," he said, adding the key date was March 27, when the continuing budget resolution had to pass to avert a government shutdown.

Despite U.S. media hype, experts said the impact, while affecting some areas, would not cause economic paralysis.

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

Indeed, markets remain high, with the Dow Jones industrial average nearly hitting an all-time high Thursday afternoon before retreating somewhat by the end of trading, and analysts say the numbers reflect a market at ease with the sequester.

The sequester does not actually cut spending. Rather, it cuts increases in spending, amounting to 85 billion U.S. dollars in a 3-trillion-U.S. dollar budget.

O'Connell said allowing the sequester to go through was perhaps the only chance Republicans had to set the stage for further cuts to Washington's massive spending.

"This is really the best opportunity they are going to have," he said.

Some experts said any pain caused by the sequester would pale in comparison to the long-term consequences of saddling the country with an unbearable future debt burden that could devalue the currency and kill Americans' ability to buy goods.

But analysts said cutting spending was no easy task, as lawmakers on both sides wanted to protect their sacred cows, and neither party wanted to touch entitlements, which top the list of Washington expenses.

Critics charge Obama with playing up fears in a partisan effort to gain leverage on Republicans, accusing him of wanting to grow the size and scope of the federal government.

Meanwhile, 45 percent of Americans said they wanted Congress to stop the cuts, while 37 percent said they wanted their member of Congress to allow the cuts to take effect, according to a Gallup poll released Wednesday.

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