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Obama: government will manage sequester as well as it can

U.S. President Barack Obama nominates air quality expert Gina McCarthy to lead the Environmental Protection Agency, nuclear physicist Ernest
U.S. President Barack Obama nominates air quality expert Gina McCarthy to lead the Environmental Protection Agency, nuclear physicist Ernest

WASHINGTON (Reuters) - President Barack Obama said on Monday that government agencies would need to make "very difficult decisions" as a result of sharp spending cuts that went into effect last week but warned that families would be hurt and economic growth would suffer.

Government agencies must cut their spending by $85 billion as of Friday after the president and Congress failed to agree to an alternative deficit reduction plan. The effects of those cuts will be rolled out in coming weeks and months as government agencies put in place plans for operating with less money.

"We are going to manage it the best we can to try to minimize the impacts on American families but it's not the way for us to go about deficit reduction," Obama said at the beginning of the first Cabinet meeting of his second term.

Obama said he would continue to try to get Republicans to compromise on a plan to roll back the cuts, taking place under a process known as sequestration. Republican leaders have said they will not negotiate so long as the president insists that increasing taxes be part of a resolution.

Obama discussed the budget impasse with lawmakers over the weekend. He said he would be willing to make cuts to government-run programs Medicare and Social Security as a way to blunt the effects of the spending cuts.

Republicans have long argued that the only way to tame budget deficits over time is by slowing the cost of sprawling social safety net programs.

These include the Medicaid healthcare program for the poor, the Medicare government healthcare program for the elderly and disabled, and the Social Security retirement program, which are becoming more expensive as a large segment of the U.S. population hits retirement age.

(Reporting By Mark Felsenthal; Editing by Sandra Maler)

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