Sequestration still looms despite fiscal deal - WAFF-TV: News, Weather and Sports for Huntsville, AL

Sequestration still looms despite fiscal deal

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HUNTSVILLE, AL (WAFF) -

Congress' deal on the fiscal cliff leaves the Tennessee Valley still hanging on the threat of severe cuts.

The U.S. House approved a bill to raise taxes and extend unemployment benefits, but the vote merely delayed a series of deep automatic spending cuts which were due to kick in.

The threat of those cuts raised alarms in North Alabama where military contracts are a crucial part of the economy.

"I would characterize it as a delay in the firing of the shot," said CEO of DESE Research, Wally Kirkpatrick.

Kirkpatrick said for his company, watching the countdown to sequestration and the fiscal cliff has been tense and not conducive to launching new projects or creating jobs.

"The uncertainly what the president's going to do and the congress is going to do in terms of how to allocate the cuts and all of that keeps industry frozen," said Kirkpatrick. "They're cautious.  They spend as little as possible.  They hire as few new people as they can get by with."

The sequestration plan called for across the board spending cuts, including $55 billion this year in defense spending.

The fiscal cliff deal puts off a decision on those cuts for two months.

Defense Secretary Leon Panetta who said the cuts would devastate national security now says,

"Had Congress failed to act, I would have been required to send out notice to our 800,000 civilian employees that they could be subject to furlough. (…) Unfortunately, the cloud of sequestration remains."

Kirkpatrick said the breathing room is nice but he expects the debate to get even more fierce and complicated as congress debates not just budget cuts, but raising the national debt too.

"You're going to see some real donnybrooks between now and the end of the next 60 day period as we begin to address raising the federal debt ceiling and allocating these cuts."

Kirkpatrick said he remains hopeful there will be a deal to mitigate the worst of the sequestration cuts.

Long term, he said any answer to the anxiety suppressing businesses and jobs may have to wait until the election in 2014.

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