WRAPUP 8-U.S. lurches into new budget crisis, spending cuts imminent

Fri Mar 1, 2013 6:32pm EST
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* Washington to begin $85 billion in cuts

* Disruption to air travel, cancer research feared

* Parties play the blame game

* Financial markets take the news with calm

By Richard Cowan and Jeff Mason

WASHINGTON, March 1 (Reuters) - The U.S. government stumbled headlong on Friday toward spending cuts that could dampen the economy and curb military readiness, after President Barack Obama and congressional leaders failed to find an alternative budget plan.

Put in place during a bout of deficit-reduction fever in 2011, the automatic cuts can only be halted by agreement between Congress and the White House.

As expected, a deal proved elusive in talks on Friday, meaning that government agencies will now begin to hack a total of $85 billion from their budgets between Saturday and Oct. 1. Financial markets in New York shrugged off the stalemate in Washington.   Continued...