Monday, January 28, 2013

U.S. waits for the next financial shock - media

Opposition of political parties in the United States makes more real the threat of sequestration - automatic budget cuts in the country by $1.2 trillion, which could shake the American economy, the newspaper Financial Times.

The measure, which aims to reduce the military expenses by $600 billion over 10 years, and discretionary spending budget for the same amount, was approved in 2011 and will come into force on 1 March 2013.

Economists assume that Congress will prevent sequestration or replace it with other programs to reduce budget spending, and many experts perceived short-term debt ceiling increase, initiated earlier by Republicans as a step towards the reconciliation.

However, Republicans' representatives have made it clear that they were preparing to the new battle, and intend to take a tough stance in supporting a reduction of $1.2 tlrn, even over the objections of the "hawks" within the party opposing the reduction in defense spending.

"I think that sequester will be approved" - said an influential Republican Congressman Paul Ryan in an interview to NBC. While a number of Republican deplores the reduction of military spending, which is warning the administration of U.S. President Barack Obama endangers the national security, Ryan and his supporters say the necessary to reduce budget costs.

"It's better to sequester than suspension of its entry into force or at all waived. So let it be what needs to happen" - said Ryan. In turn, the Democrats are going to defend to the last programs such as Medicare and programs aimed at supporting senior citizens. The representatives of the parties are ready to replace sequestration only to increase tax rates on wealthy Americans, while Republicans say that will not agree with such measures.

According to estimates research of Macroeconomics Advisers firm, the sequestration will slow U.S. economic growth in 2013 by 0.7 percentage points - to 1.9% from 2.6% of expected.

Recall the recent Treasury Secretary Timothy Geithner said that if Congress does not agree on the debt ceiling soon, by mid-February the U.S. expects a default.

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