Severe budget cuts to hit economy at delicate time

(CBS News) As the automatic budget cuts known in Washington as the sequester draws closer, consider this: the federal government does $500 billion worth of business with private contractors, including as many as 120,000 small businesses.

That's everyone from the makers of nearly a million pairs of combat boots each year to the roughly 700 companies in 44 states that make parts for the Boeing C-17 military transport plane.

Jill Schlesinger, editor at large of CBS MoneyWatch, told "CBS Evening News" Saturday anchor Jim Axelrod that the blunt cuts come during a delicate time of the nation's economic recovery.

"Let's say that we're running a town, and we just had to make these across-the-board spending cuts," Schlesinger said. "What if we had to cut 20 firemen at the exact same we're going to cut 20 librarians? I mean, I love the library, but they are not equal, and what this sequestration does is it equalizes the pain across every single agency without a forethought, without saying, 'Wait a minute, what's important to safety? What's important to actually bringing money in the door?'"

The cuts would drag on the nation's economic growth, Schlesinger said.

"The economy is still fragile," she said. "Yes, we have been in recovery for a couple of years, and that's good, but this is not a robustic recovery. We're not growing at 3 or 3-and-a-half percent. We're only growing by 2 percent."

Still, the cuts aren't likely to have as negative of an effect on Wall Street because investors saw them coming, Schlesinger said.

"They've built it into their models," she said. "They've said, 'OK, we're going to give up a half a percent of growth, but we still believe that we will be able to grow enough so companies can make money.'"

A lot of the investors Schlesinger spoke to said that if things take a turn for the worse they suspect that Congress will come together and do something retroactively to potentially delay the cuts.

"No one," she said, "wants to be in office presiding over an economy that goes into a double-dip."

Watch Schlesinger's full conversation with Axelrod in the player above