WASHINGTON— Now that the deadline for a Congressional compromise has passed, the process of cutting $85 billion from the federal budget begins. Economists say the impact will not be immediate, but the fallout already has begun.
With across the board budget cuts all but guaranteed, some government agencies already have placed a freeze on hiring. At the Federal Aviation Administration, up to 40 thousand workers expect to see their hours reduced.
"It means I will probably be late on a house payment, not buy enough groceries, and then you throw that in with gas prices going up, it is devastating," said Gary Perusse, FAA worker.
The same is true for customs and border security agents, for meat inspectors and educators. Low-income families and the long-term unemployed also will lose benefits. The net effect, said budget expert Scott Collender, is negative stimulus for an economy that's barely growing.
"Without businesses spending, without consumer spending, without trade helping, lower government spending is going to hurt and hurt substantially," said Collender.
Estimates say the cuts could shave more than half a percent from gross domestic output. That's enough for the International Monetary Fund to revise earlier estimates for U.S. growth.
"A lot of it depends upon how aggressively or how fully sequestration is implemented. There will be an impact on global growth," said IMF spokesman William Murray.
Analysts say the spending cuts could cause delays in shipping and cut U.S. demand for imported goods.
Most frustrating, said economist Charles Konigsberg, is that the crisis could have been avoided. "I think it's a lose, lose situation. Everyone loses."
The cuts come as the economy was showing signs of progress. Despite the setback, President Barack Obama said negotiations with Congress would continue.
"...if Congress comes to its senses, a week from now, a month from now, three months from now - then there's a lot of open running room there for us to grow our economy much more quickly," said Obama.