Jobless, Cities Could Be First To Feel Budget Pain
"These impacts will not all be felt on day one," Obama acknowledged in a meeting with governors at the White House on Monday. "But rest assured the uncertainty is already having an effect."
Homeland Security Secretary Janet Napolitano warned that the federal government would be unable to "maintain the same level of security at all places around the country" once the automatic cuts began to take effect.
The public will feel the results "in the next few weeks," she said, and "it will keep growing."
The majority of the federal budget is in fact walled off from the cuts. Social Security and veterans' programs are exempt, and cuts to Medicare are generally limited to a 2 percent, $10 billion reduction in payments to hospitals and doctors. Most programs that help the poor, like Medicaid, food stamps, subsidized school lunches, Pell Grants and supplemental security income payments are also exempt.Still, the Pentagon will feel the brunt of half the cuts. Pay for active military is off-limits for cuts, so the rest of the defense budget must absorb the hit. The Obama administration says defense contractors have already ramped down work, contributing to a dip in economic activity in the fourth quarter of last year. The Navy has decided not to deploy an aircraft carrier as planned to the Persian Gulf. Elsewhere, the White House's budget office says long-term unemployed Americans would lose an average of more than $400 in benefits over the year. The cuts do not affect state unemployment benefits, which jobless workers typically get soon after their loss of work. The federal reductions could begin immediately, though some analysts say the government could delay them for a short period to avoid a harmful hit on the economy. Bill Hoagland, a former top Republican Senate budget aide and now senior vice president at the Bipartisan Policy Center, a Washington think tank, said the administration must be "betwixt and between" when it comes to addressing reductions in programs like jobless aid.
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