$85 billion in cuts initiated
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NATIONWIDE -- Billions in automatic spending cuts are now officially in effect after President Obama and Congressional Leaders fail to reach an agreement to avert sweeping automatic spending cuts.
President Obama officially initiated the $85 billion in cuts with an order to agencies Friday night. The cuts run through September 30th, the end of the federal fiscal year.
The White House said we'll soon see the effects through furlough notices for government workers, and then cuts to government spending on defense contracts and domestic government programs.
President Obama outlined the impact across the board.
"Hundreds of thousands of Americans who serve their country, border patrol agents, FBI agents, civilians who work at the Pentagon, all will suffer significant pay cuts and furloughs. All of this will cause a ripple effect throughout our economy. Layoffs and pay cuts means that people have less money in their pockets and that means that they have less money to spend at local businesses," said Obama.
The congressional budget office however said spending cuts are really about half of what's projected, at about $44 billion.
President Obama met with Congressional leaders Friday, looking for a way around massive budget cuts.
In his weekly address the day after, the President said the sequester will not only hurt the economy and cost Americans more jobs, but put the brunt of the financial burden on the middle class. He also said Congress has the power to put an end to these budget cuts, but only as soon as both sides agree to compromise.
"At a time when our businesses are finally gaining some traction, hiring new workers, bringing jobs back to America - the last thing Washington should do is to get in their way. That's what these cuts to education, research, and defense will do. It's unnecessary," said Obama.
Beginning this week, many businesses working with the military will be forced to lay off workers, significantly impacting communities near military bases. Border patrol agents, FBI agents, and civilians who work for the Defense Department will also begin seeing their wages and hours cut.
Republicans also took aim at the looming budget cuts in their weekly address. Washington Congresswoman Cathy McMorris Rodgers said the president must stop using this debate as an excuse to raise taxes.
Instead, she said leaders should find ways to cut spending. She said the president wants more tax increases, even after he raised taxes just last month to avert the fiscal cliff.
"We can't let Washington continue spending money it doesn't have, especially when it's taking that money straight from your wallets. The problem here isn't a lack of taxes. This year alone, the federal government will take in more revenue than ever before. Spending is the problem, which means cutting spending is the solution," said Congresswoman Cathy McMorris Rodgers.
Rodgers also said that House Republicans are proposing ways to cut government waste and make long-term reforms that put us on a path to a balanced budget. Meanwhile, Republican leaders said spending is the issue rather than revenue.
"Probably would a lot better ways to reduce that spending than by the formulaic approach of the sequester; but, we don't intend to reduce spending a penny less than we all promised the American people we would reduce spending in August of 2011. Let me further add that we are talking about a 2.4 percent reduction in federal spending out of $3.6 trillion a year," said Senator Mitch McConnell.
McConnell also said American families have had to make bigger cuts to their own budgets over the last four years.
Republicans and Democrats are now preparing for the next showdown, a possible government shutdown on March 27th. Congress has to pass a bill extending federal spending authority or the government will close for business.