Automatic US spending cuts officially go into effect. US President Barack Obama signed the decree that triggers $85 billion in spending cuts through September alone.
With the signing, the cuts that were foreseen in the 2011 debt ceiling increase agreement come into force. The automatic cuts will be 85 billion dollars until September and 1.200 billion dollars over ten years.
Obama has repeatedly opposed the cuts but in the absence of an agreement in Congress he has not been able to avoid them. A last-minute agreement was attempted today but without success: the leaders of Congress left the White House with nothing done. "They are stupid and unnecessary," Obama said at the end of the meeting. And even if they don't cause a new financial crisis, they will make themselves felt on the recovery – he warned – and on the job market. "They will have a domino effect and cost us 750.000 jobs," Obama added. Standard & Poor's has tempered fears of a sudden slowdown: the cuts will have a limited impact on the economy provided they do not last over time. Standard & Poor's in fact believes that they will be replaced in the second quarter by a long-term plan.
