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The Senate yesterday confirmed Jacob Lew as Treasury Secretary with a vote of 71-26. Lew faces a...
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Thursday, February 28, 3:37 AM ETThe Senate yesterday confirmed Jacob Lew as Treasury Secretary with a vote of 71-26. Lew faces a tough first few months: $85B of automatic spending cuts are due to take effect tomorrow, and then on March 27, a funding measure for U.S. agencies expires. Less than two months after that, the temporary suspension of the government's borrowing limit will end.
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"We shouldn’t underestimate the ability of the sequester to slow the economy and weigh down GDP. The $85 billion cut in discretionary spending this year is only 2.4% of total federal outlays over the past 12 months of $3.58 trillion. However, those outlays include $2.19 trillion in spending on entitlements, which are a redistribution of income that doesn’t have a direct impact on GDP through its federal government component. Federal government spending in GDP, in current dollars, was $1.20 trillion (saar) during Q4-2012. That’s where the sequestration cuts will hit, as they account for 7.1% of this total. "