US President Barack Obama yesterday urged Congress to replace automatic across-the-board spending cuts known as the sequester with what he called "a balanced approach" combining "smart" cuts with reforms.
The appeal, in his weekly radio and internet address, came the day after the president, complying with the law, signed an order bringing arbitrary cuts worth US$85 billion into force.
If left in place without remedy, government agencies will have to hack a total of US$85 billion from their budgets between Saturday and October 1, cuts that could cause economic harm, slash jobs and curb military readiness.
But the Dow Jones Industrial Average moved closer to an all-time high last week, as improving economic sentiment overrode concerns about spending cuts. The Dow closed on Friday at 14,089.66, up 0.64 per cent for the week and within striking distance of the all-time peak of 14,164.53.
In Hong Kong, Financial Secretary John Tsang Chun-wah said the US economy could survive the massive spending cuts.
"I don't think that would lead the US into a recession," he said. "So far the US recovery has been quite good, and housing sales and so forth have been quite positive, so I think for all the advanced economies, the US is better off than many other countries.
"We have already taken into consideration the international situation how that would affect the Hong Kong's economy."