U.S. stock markets were little changed in the wake of Washington’s latest failure to co-operate, which suggests investors anticipate politicians will yet resolve to blunt the effects of sequestration. Mr. Obama told a press conference that he would continue to seek an agreement to blunt the full impact of sequestration, which could result in tens of thousands of lost public service jobs and a reduction of economic growth by a half of a percentage point.
“There is a caucus of common sense up on Capitol Hill, but it’s a silent group right now,” Mr. Obama said. While it may take a “couple of weeks” or a “couple of months” of negotiating, “my view is ultimately that common sense prevails,” Mr. Obama said.
The “sequester” was designed to force an enlightened negotiation over narrowing the U.S. bloated budget deficit, which has exceeded $1-trillion for four consecutive years. The thinking was that the prospect of $1.2-trillion of indiscriminate budget cuts over a decade – split roughly evenly between discretionary spending and the Defence Department – would force politicians to come up with a more elegant solution.
Read more: A dysfunctional U.S. government in spotlight as sequester talks stall - The Globe and Mail
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