WASHINGTON, March 5 Deep U.S. government
spending cuts threaten the fragile economic recovery and will do
little to address the nation's long-term fiscal challenges, a
top White House economic adviser said on Tuesday.
About $85 billion in automatic federal budget cuts, known as
the "sequester," started taking hold on March 1, amid warnings
of job losses and harm to an economy that barely grew in the
final three months of 2012.
"These indiscriminate, across-the-board spending cuts pose a
threat to the ongoing economic recovery," Alan Krueger, chairman
of the White House Council of Economic Advisers, told the
National Association of Business Economics.
"You can't take $85 billion out of the federal budget in the
remaining seven months of the fiscal year without hurting the
economy and job growth."
According to the Congressional Budget Office, the sequester
could cost about 750,000 jobs by the end of the year, most of
them in the private sector.
The International Monetary Fund warned last week that the
cuts, if fully implemented, could shave more than half a
percentage point from growth this year.
"We can cut the near-term deficit in a dumb way that
short-changes the future without addressing our long-term budget
problems. The sequester was not designed as a means to address
our budgetary challenges," said Krueger.
"And what do we, as a nation, get in return for this
self-inflicted wound? The sequester is the antithesis of smart,
balanced fiscal policy. It jeopardizes the current recovery at a
time when policymakers should be focused on growing the economy
and investing in our nation's future."