Bipartisan deficit-reduction panel failed to reach an agreement earlier in the week, setting off a default plan to make across-the-board-spending cuts
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Stocks plunged on Monday after Congress' latest bid to resolve the federal budget gridlock appeared to fail. New Jersey Treasurer Andrew P. Sidamon-Eristoff said yesterday the $1.2 trillion in federal spending cuts triggered by a congressional committee's failure to reach a deficit reduction agreement would not do serious harm to the state's budget.TRENTON — State Treasurer Andrew P. Sidamon-Eristoff said Wednesday the $1.2 trillion in federal spending cuts triggered by a congressional committee’s failure to reach a deficit reduction agreement would not significantly harm New Jersey’s budget.
The bipartisan panel, which was established this summer, failed to reach an agreement earlier in the week, setting off a default plan to make across-the-board-spending cuts.
The reductions in spending will come from the military budget and a host of domestic programs. But Social Security, Medicaid, food stamps and other federal programs, which states rely heavily on, were spared from the budget ax.
"Although the impacts nationally will no doubt be significant," Sidamon-Eristoff said in a written statement, "it is our preliminary understanding that, due to exemptions under the Budget Control Act of 2011 and other provisions of federal law, the majority of funding that states receive via federal grants will not be subject to sequestration."
In New York, which relies much more heavily on federal spending, Gov. Andrew Cuomo said the failure to reach an agreement could cost the state billions of dollars over the next decade.
The automatic cuts will not be put in place until 2013, and several Democratic and Republican lawmakers have already vowed to restore some of the funds. However, President Obama has vowed to veto any rollbacks.
He says lawmakers must come up a with a plan to shave at least $1.2 trillion off the deficit or accept the default option.
Related stories:
• Editorial: In debt ceiling negotiations, compromise is out of style
• Debt ceiling deal won't have a big impact on New Jersey in near term
• House passes debt ceiling deal as Rep. Gabrielle Giffords returns to Congress
• Bipartisan deficit-reduction panel prepares to admit failure as deadline looms
• Stocks fall sharply after Congress bid to resolve budget gridlock stalls
