Monthly Briefing on the World Economic Situation and Prospects, No. 52

The Congress of the United States failed to agree on how to reduce the?government deficit in the next decade, thereby automatically activating the?Budget Control Act of 2011 on March 1 of this year. The automatic cuts,?referred to as the ?sequester,? include across-the-board automatic spending cuts worth $1.2 trillion, equally distributed between defense and non-defense programmes. Although the Act exempts Social Security, Medicaid?and other entitlement programmes from sequestration, it will result in cuts to education, public health and a number of social programmes. The impact of the cuts will reduce the capacity of many government agencies to deliver their services.?

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