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Entries in Sequester (3)

Friday
Mar012013

Airport Travel Won't Be Affected Right Away by Sequester

ICHIRO/Digital Vision(NEW YORK) -- You're not an employee with a federal agency but you're worried anyway about the sequester because you've booked a flight and have been hearing all kinds of nightmare scenarios about air travel.

If this description fits you, you can rest at ease -- at least for now.

FareCompare.com's Rick Seaney contends that folks who've made travel plans during this month won't have much to worry about because airport worker layoffs or furloughs won't occur for at least 30 days.

If Washington gets their act together and resolves the issue of automatic spending cuts by sometime in March, then things ought to be okay for flyers.

Otherwise, according to Seaney, "there's going to be a lot of pain and agony in air travel starting in April."

Copyright 2013 ABC News Radio

Tuesday
Feb262013

Bernanke on Sequester Cuts: Too Much, Too Soon

Alex Wong/Getty Images(WASHINGTON) -- The chairman of the Federal Reserve says if lawmakers can’t reach a deficit reduction deal by Friday the resulting mandatory budget cuts known as “the sequester” could become a case of too much, too soon for the fragile economic recovery.

“Congress and the administration should consider replacing the sharp, front loaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run,” Ben Bernanke said Tuesday. “Such an approach could lessen the near-term fiscal headwinds facing the recovery while more effectively addressing the longer-term imbalances in the federal budget.”

Testifying before the Senate Banking Committee, Bernanke cited the non-partisan Congressional Budget Office’s estimates that should the budget cuts take effect without hindrance, GDP growth would be curbed 0.6 percent by the end of the year. The Fed chair dismissed the suggestion by some members of Congress to allow the sequester to pass while redistributing cuts among individual programs and departments.

“I think the near-term effect on growth would not be substantially different if you did it that way,” he said, adding that any programs selected by lawmakers to avoid or go under the budget knife would likely be politically driven.

His appearance before the committee was part of a semi-annual report required of his agency to Congress, where he stated existing law is expected to narrow the share of the deficit to GDP from 7 to 2.5 percent by 2015.

Bernanke also addressed concerns over the ongoing government policy to keep short term interest rates for borrowers at a record low. Bernanke stated the low costs were vital to growing the economy and would continue, but acknowledged the future risk.

“Very low interest rates, if maintained for a considerable time, could impair financial stability,” he said. “For example, portfolio managers dissatisfied with low returns may ‘reach for yield’ by taking on more credit risk, duration risk, or leverage. On the other hand, some risk-taking -- such as when an entrepreneur takes out a loan to start a new business or an existing firm expands capacity -- is a necessary element of a healthy economic recovery.”

Low long-term rates had led to increased spending on durable goods such as automobiles and the housing market, he said.

One slightly testy exchange resulted from the otherwise subdued hearing when the Fed chair was questioned by lawmakers of both parties over the Fed’s perceived slow progress eliminating the concept of banks that were “too big to fail.”

Sen. Elizabeth Warren, D-Mass., cited a recent Bloomberg study that suggested large lenders were receiving an $83 billion “insurance program” in her eyes. The senator said corporations needed to give more of that money back to taxpayers.

“The big banks are getting a terrific break and the little banks are just getting smashed on this, they're not getting a break,” she said.

Bernanke is expected to face the House Financial Services Committee on Wednesday.

Copyright 2013 ABC News Radio

Wednesday
Feb132013

Would Sequester Cuts Put Meat in Danger?

Comstock/Thinkstock(WASHINGTON) -- Take our naval vessels, our jet-engine programs and our Social Security checks, but do not lay hands on our meat.

If the congressionally mandated budget “sequester” happens, the meat industry says it will take a hit, and U.S. Agriculture Secretary Tom Vilsack acknowledged this week that his department will have to furlough food inspectors if the sequester can’t be avoided by another deficit-cutting deal.

“Unfortunately, unless Congress acts to prevent sequestration, FSIS [the Food Safety and Inspection Service] will have no choice but to furlough its employees in order stay within the budget Congress has given it,” Vilsack wrote in a letter to the American Meat Institute (AMI) on Tuesday. “Because we understand that furloughing our food safety inspectors would not be good for our consumers, the economy, the meat and poultry industry, or our workforce, we view such furloughs as the last option we would implement to achieve the necessary sequestration cut.”

The AMI had warned in its own letter to Vilsack that inspector furloughs “would have a profound, indeed devastating, effect on meat and poultry companies, their employees, and consumers, not to mention the producers who raise the cattle, hogs, lamb, and poultry processed in those facilities.”

The trade publication Farm Futures has noted that without inspectors to inspect meat and poultry, producers can’t keep making it, meaning furloughs could force some producers to close their doors.

Copyright 2013 ABC News Radio







ABC News Radio