Neither a Democratic nor a Republican bill aimed at replacing the so called sequester was able to get enough support to win a test vote on Thursday. The budget cuts for fiscal year 2013 will not take effect all at once on Friday. Instead, they will go into effect gradually through the end of the fiscal year on Sept. 30. The sequester would cut about $1 trillion over nine years.
Beginning today:
-Across-the-board cuts under sequestration formally take effect today. The cuts amount to "only" 2.3% of total federal spending.
-Sequestratoin is likely to reduce real GDP growth in 2013 by 0.6%, with the effects concentrated in the second and third quarter.
-Having passed the March 1st deadline to avoid sequestration, the next date to watch will be March 27th when current spending authority expires.
-Social Security, Medicaid, veteran benefits are exempt from the sequester.
U.S markets on Thursday shrugged off the budget drama in Washington. Financial stocks held their ground Friday as investors, with plenty of time to adjust their portfolios, looked past looming federal spending cuts.