The U.S. government spends more on its military each year than any other nation by far, but it will be a restrained Department of Defense (DOD) that presents itself at this year’s Paris Air Show. That’s because a previously obscure fiscal mechanism known as “sequestration” requires the DOD to cut $41 billion, or roughly 8 percent of its $527 billion base budget, by September 30, the end of the fiscal year on the government’s calendar.
Budget Control Act
The effects of the U.S. government budget cuts that started on March 1 will not likely be felt until April but they could be significant for airlines and their passengers. The Federal Aviation Administration, the Transportation Security Administration (TSA) and the Customs and Border Protection (CBP) agency will absorb the mandated spending cuts known as the “sequester” in part by furloughing employees, or requiring them to take several days of unpaid leave.
Washington, D.C., seems to be a city that is in perpetual crisis. Now the U.S. government is in conniptions over the “fiscal cliff.” Federal Reserve chairman Ben Bernanke coined that metaphor to describe the tax increases and automatic spending cuts that kick in on January 2 unless Democrats and Republicans somehow tame the $16 trillion national debt.
The divided U.S. government edged closer to the so-called the “fiscal cliff,” a combination of tax increases and automatic spending cuts that will be imposed on January 2 unless political parties reach agreement on a package to reduce the country’s $16 trillion national debt. With 25 days remaining before the measures take effect, the parties were at a stalemate.