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Consequences of budget debacle

Tuesday, November 22, 2011 - 02:17

Nov. 22 - The failure of the ''super committee'' to reach a budget agreement triggers automatic spending cuts to national security and a long list of domestic programs. Bobbi Rebell reports.

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PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL The failure of the U.S. congressional "super committee" to reach a deal on the country's ballooning debt has created a new level of uncertainty that could have dire consequences. As it stands, there will be $1.2 trillion in automatic spending cuts over 10 years starting in January of 2013- and half of those will fall on military spending. Some argue that, in addition to the security concerns, defense cuts will be counter-productive given the high unemployment rate. Michael Ciarmoli, Senior Aerospace and Defense Analyst, Keybanc Capital Markets: SOUNDBITE: MICHAEL CIARMOLI, SENIOR AEROSPACE AND DEFENSE ANALYST, KEYBACK CAPITAL MARKETS (ENGLISH) SAYING: "These are not low paying jobs. A lot of these are high paying engineering science jobs and with the unemployment rate at 9 percent right now, these cuts could easily add one percentage point to that rate. And then on the other side you are going to have the administration trying to create jobs, so very counterintuitive, what's being done here in terms of overall job creation in this country." Other programs like food safety, education, foreign aid, public safety and law enforcement budgets would all be hit with across-the-board spending cuts, as well as low-income housing and energy assistance. Also at risk: extending unemployment benefits, and the payroll tax holiday- which reduced the amount of money taken out of workers paychecks. They are considered among the most effective ways to boost the economy because they put money in the hands of people who spend it quickly. Stan Collender a partner at Qorvis- remains optimistic about a reprieve: SOUNDBITE: STAN COLLENDER, PARTNER, QORVIS (ENGLISH) SAYING: "Well the payroll tax holiday I think is likely to be extended although it's going to be a pretty bitter fight, and it's going to go down to the maybe the very, very last minute. It will be another of what seems to be a steady series of perils of Pauline cliffhanger endings when it comes to the budget and taxes these days." Congress does have the power to vote to rescind some or all of the cuts. The White House has said President Obama would block any efforts to roll back the automatic spending cuts. But much of this budget battle could change after next year's elections. Bobbi Rebell, Reuters.

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Consequences of budget debacle

Tuesday, November 22, 2011 - 02:17