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Sequester: No deal in sight on automatic US budget cuts Sequester: No deal in sight on automatic US budget cuts
(about 2 hours later)
The US Congress is set to adjourn for the weekend without passing a deal to avert $85bn (£56bn) in budget cuts scheduled to take effect on Friday. The US Congress is adjourning for the weekend without having reached a deal to avert huge automatic budget cuts.
The cuts, worth $85bn (£56bn), are to take effect on Friday unless an agreement is reached.
President Barack Obama has invited congressional leaders to the White House for negotiations.President Barack Obama has invited congressional leaders to the White House for negotiations.
The Senate rejected both Republican and Democratic budget bills, and the Republican House speaker said the House would not act before the Senate. Mr Obama warned that the cuts would harm the US economy and middle class families. The IMF has warned that they could have a global impact on growth.
Mr Obama has warned the cuts will harm the fragile US economy. On Thursday the Senate rejected budget bills from both parties, and a top Republican said the House would wait for Senate action.
The president accused Senate Republicans of allowing the cuts to proceed rather than "closing a single tax loophole that benefits the well-off and well-connected".
"They voted to let the entire burden of deficit reduction fall squarely on the middle class," he said in a statement on Thursday.
'Tumble downward'
Split roughly evenly between military and domestic programmes, the spending cuts total $85bn this fiscal year and $1.2tn over the next decade.Split roughly evenly between military and domestic programmes, the spending cuts total $85bn this fiscal year and $1.2tn over the next decade.
The cuts, known in Washington DC as the sequester, were designed in 2011 as an intentionally painful cudgel to encourage negotiations on the deficit. Analysts say they were never intended as a deficit reduction tool. The cuts, known in Washington DC as the sequester, were designed in 2011 to encourage negotiations on the deficit. Analysts say they were never intended as a deficit reduction tool.
But attempts to find $1.2tn in savings over 10 years, whether through budget cuts or tax rises, have failed since then. Barring a deal, the cuts are scheduled to be worked into the federal budget by 23:59 local time on Friday (04:59 GMT on Saturday).But attempts to find $1.2tn in savings over 10 years, whether through budget cuts or tax rises, have failed since then. Barring a deal, the cuts are scheduled to be worked into the federal budget by 23:59 local time on Friday (04:59 GMT on Saturday).
On Wednesday evening, Mr Obama said the cuts would be a "tumble downward" for the economy, though he acknowledged it could be weeks before Americans felt the impact.
Some Republicans, meanwhile, have accused the president of using "scare tactics" to force Congress to raise taxes.
'Cards on the table'
The Senate on Thursday failed to pass two separate plans to halt the cuts and replace them with other deficit reduction measures.The Senate on Thursday failed to pass two separate plans to halt the cuts and replace them with other deficit reduction measures.
A Senate Democratic plan blocked by Republicans proposed nearly $30bn in future cuts in defence spending and a minimum tax rate on incomes exceeding $1m.A Senate Democratic plan blocked by Republicans proposed nearly $30bn in future cuts in defence spending and a minimum tax rate on incomes exceeding $1m.
Senate Republicans, meanwhile, proposed maintaining the overall level of reductions but giving Mr Obama power to redistribute them. That measure was rejected by a vote of the full Senate.Senate Republicans, meanwhile, proposed maintaining the overall level of reductions but giving Mr Obama power to redistribute them. That measure was rejected by a vote of the full Senate.
Democrats hold a majority in the Senate but Republicans used a parliamentary manoeuvre to block a vote on the Democratic bill.Democrats hold a majority in the Senate but Republicans used a parliamentary manoeuvre to block a vote on the Democratic bill.
Also on Thursday, Republican House Speaker John Boehner said the House had already passed bills to avert the cuts and said the House would not be moving any further legislation until the Senate acted.Also on Thursday, Republican House Speaker John Boehner said the House had already passed bills to avert the cuts and said the House would not be moving any further legislation until the Senate acted.
"We've laid our cards on the table," he said."We've laid our cards on the table," he said.
The proposals by the Republican-controlled House included many measures unlikely to pass the Democrat-controlled Senate.The proposals by the Republican-controlled House included many measures unlikely to pass the Democrat-controlled Senate.
Mr Boehner and House Democratic leader Nancy Pelosi, as well as the Senate's Democratic majority leader Harry Reid and Republican minority leader Mitch McConnell, are due to attend the White House talks on Friday.Mr Boehner and House Democratic leader Nancy Pelosi, as well as the Senate's Democratic majority leader Harry Reid and Republican minority leader Mitch McConnell, are due to attend the White House talks on Friday.
Next budget battleNext budget battle
White House spokesman Jay Carney said there were "no preconditions" on what could be discussed in the Friday meeting but said Thursday's action in Congress would affect the conversation. White House spokesman Jay Carney said there were "no preconditions" on what could be discussed in the meeting.
By late afternoon, the House rank-and-file had left for the weekend, signalling no action on a final deal was likely to occur before Friday's deadline.
Republicans and Democrats are at an impasse over major issues, with Republicans refusing to allow tax rises and Democrats vowing to protect cherished social programmes.Republicans and Democrats are at an impasse over major issues, with Republicans refusing to allow tax rises and Democrats vowing to protect cherished social programmes.
Meanwhile, Congress is just weeks away from its next budget battle.Meanwhile, Congress is just weeks away from its next budget battle.
On 27 March a temporary budget that has kept the federal government running since the last budget ran out is due to expire.On 27 March a temporary budget that has kept the federal government running since the last budget ran out is due to expire.
Failure by Congress to enact a new stop-gap budget could see parts of the federal government shut down.Failure by Congress to enact a new stop-gap budget could see parts of the federal government shut down.
House Republicans said they would vote on a bill next week to fund the government through the end of the fiscal year but keep in place some automatic cuts taking effect on Friday.House Republicans said they would vote on a bill next week to fund the government through the end of the fiscal year but keep in place some automatic cuts taking effect on Friday.
The measure is unlikely to win Democratic approval. Meanwhile the International Monetary Fund said the global economic recovery could be harmed by the automatic spending cuts,
"We will see what happens on Friday, but everybody is assuming that sequestration is going to take effect," IMF spokesman William Murray said.
"What it means is that we are going to have to re-evaluate our growth forecasts for the United States and other forecasts," he added.