News Column

US Cuts Could Slow Growth in Other Nations, Obama Says

Feb. 22, 2013
President Obama
President Obama

US President Barack Obama warned Friday slower US growth due to steep, looming government spending cuts could have a spillover effect on growth in other countries.

Obama called on Congress to take steps to avert the automatic cuts due to take effect next week and said the White House would continue to work with lawmakers on a solution ahead of a March 1 deadline.

"My hope is we can see a different course taken by Congress," he said on the sidelines of a meeting with Japanese Prime Minister Shinzo Abe. "This should be a no-brainer."

Unlike earlier talk about not increasing the US debt ceiling, the so-called sequester did not directly imperil global financial markets, but it could lead to slower growth in the US that would in turn hurt growth elsewhere, he noted.

Obama said he remained hopeful a deal could be reached before the cuts go into place.

Meanwhile, his administration continued to warn of what it said would be dire consequences to military readiness and domestic programmes as it pressures Congress to replace the cuts with less severe deficit reduction measures.

Travellers could face delays at major US airports if the cuts take effect, Transportation Secretary Ray LaHood warned.

LaHood's warnings were meant to "wake up members of Congress on the Republican side so they come to the table and we don't have this calamity on air travel," he said.

Air traffic controllers would be forced to take unpaid leave, reducing capacity at major airports, LaHood said.

This would cause delays of up to 90 minutes for takeoffs beginning in April, LaHood said. Air control towers would also face closure at smaller airports, he said.

The so-called sequester, a package of automatic budget cuts passed in August 2011, was intended to pressure lawmakers to forge 10-year deficit reductions worth 1.2 trillion dollars.

The across-the-board cuts were initially scheduled to go into effect on January 1, but were shelved for two months as part of a deal that included tax hikes on the wealthy.

The White House has sought further delays to win more time to come to a broader deficit reduction deal.

Some Republicans have indicated that, despite their concerns about large defence cuts, they were open to allowing them to reduce what they see as other wasteful spending.

Speaker John Boehner, who leads the Republican-controlled House of Representatives, this week called the sequester "bad policy" and accused Obama of not being serious about finding other cuts to replace it and instead focussing on tax hikes.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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