After endless debates President Obama has ultimately approved the sequester cuts. Despite the fact that multiple warnings regarding these cuts were voiced long ago in the end no other solutions were agreed on. The white house leader has blamed the republicans for refusing to adopt other austerity measures and for aiming the cuts at certain domains. This recent cuts threaten to bring chaos to the already fragile US economy. However how will the situation in America affect the rest of the world is still up for debate.
The department that seems to take most of the damage is the defense department. A lot of projects will be suspended and severe changes will be enforced. Many fear that these cuts will affect the USA’s status as the greatest military power. However this is far from the truth. The United States will continue to be a great power even if it pauses on some military projects. Others may argue that the involvement of the US army in troubled countries keeps them from falling deeper into chaos. This too is false statement as recent events show. Enforcing peace with the use of an army is hardly the solution to any problem. So while many may argue on the defense budget cuts others see it as the perfect solution and would encourage more defense cuts.
Another department that will take a hit from the sequester cuts is the medical domain. Drastic measures will have to be enforced. Medicare cuts will slow down and even close certain research departments. As some researched were on the brakes of new discoveries they will now face the possibility of losing years of work.
However the fact is that while these budgetary cuts may seem like the only viable solution, the repercussions could affect the rest of the world as well. The cuts will make consumers lose faith in the economy and therefore diminish the already feeble economy growth. As the world’s greatest power is losing points the global economy will inevitably be affected. IMF has already voiced its concerns regarding the USA sequester cuts. It would seem the countries most likely to be affected are the ones that are in close contact with the USA such as countries in EU. Without even wanting to, the sequester cuts could limit the shipment services in the USA and therefore slowdown the trading process.
The USA had already launched negotiations regarding free trade agreement with Europe, which is about to be finalized this year. Furthermore The USA showed interest in finalizing the TPP with countries from South America and Asia as well. However the recent budget reduction put these past negotiations under a question mark and might affect the opening of the markets.
While financial analysts struggle to predict how these cuts will affect the global economy president Obama declares that all hope is not yet lost. If the members of the congress manage to be on the same page, other measures may be adopted in order to restore the economy balance.
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