S&P says sequester likely temporary, with shallow effects

NEW YORK: Rating agency Standard & Poor's on Friday said that wide-ranging cuts to the US budget would likely have only limited effects, with the so-called sequester soon replaced by a more comprehensive package of cuts and revenue increases.

A deal to avert the cuts proved elusive in talks at the White House on Friday, meaning that government agencies will now begin to hack a total of $85 billion from their budgets between Saturday and Oct. 1.

"We believe the sequester will be temporary, replaced in the second quarter by a long-term package of spending cuts and revenue increases," S&P said in a statement. "If this proves true, we think the sequester would still have only a mild downside effect on GDP growth this year."