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Economic Slow Down Predicted As Sequester Looms

Economy Slow Down Predicted As Sequester Looms
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U.S. President Barack Obama is calling on Congress to take action to prevent $85 billion in automatic spending cuts -- known as the "sequester" -- from going into effect on March first. The sequester deadline resulted from a battle over raising the debt ceiling in August of 2011. Congress and the president agreed on a future threat of severe mandatory budget cuts as a way of forcing action to cut the national deficit. But the threat did not work, and now, the cuts are poised to happen within days -- unless Congress finds an elusive compromise to cut spending.

Democrats and Republicans in Washington are once again approaching a showdown over how to reduce the national debt -- with Republicans calling for cuts in domestic spending programs and Democrats asking that tax loopholes be closed on the wealthiest Americans.

This time, the Republicans who control the House of Representatives are threatening to let the cuts take effect. β€œThe sequester will be in effect until there are cuts and reforms that put us on a path to balance the budget over the next 10 years, period!” explained House Speaker John Boehner.

President Obama is warning the cuts would be brutal.

"These cuts are not smart. They are not fair. They will hurt our economy," Obama stated. "They will add hundreds of thousands of Americans to the unemployment roles. This is not an abstraction. People will lose their jobs."

Democratic Congressman Steny Hoyer blames Republicans.

"Thousands of Americans will lose their jobs or be furloughed, including teachers, researchers, law enforcement agents and military contractors. Everyone should be clear that sequestration is a Republican policy," he said. "And it is a bad policy."

But some Republicans, like Senator Rand Paul of Kentucky, think the sequester does not really go far enough.

"Few people understand that the sequester does not even cut government spending. It just slows the rate of growth," he noted.

The Defense Department says troop training and maintenance of aircraft and ships would be delayed or suspended if the cuts take effect.

And some 800,000 civilian defense workers would each be forced to take one day a week off -- without pay.

Some economists say the cuts could have a ripple effect on the entire economy -- and on services Americans depend on.

"A lot of workers will have to be furloughed from their jobs and those workers perform jobs like inspecting the safety of our food and water," said Joan Entmacher, an expert on family economic security.

Since U.S. federal law mandates inspection of meat, poultry and egg products, production of those commodities will shut down on days inspectors are furloughed. Mark Dopp of the American Meat Institute says the furloughs would not threaten the safety of American meat but would have a big impact on the economy.

"Not only does it affect the inspectors who are furloughed, it would affect the more than 500,000 people who work every day in meat and poultry processing facilities, from the slaughter facilities to the processing facilities," said Dopp. "It would also effect the more than one million cattle, hog and turkey producers..."

With only a few days left until the cuts take place, it is not clear whether President Obama will, once again, invite congressional leaders to the White House to try to hammer out a compromise budget deal.