Obama says spending cuts will be ‘slow grind’ on economy

House Democrats

Pelosi said House Democrats are prepared to consider ways to reduce spending for Medicare, Social Security and other entitlement programs as long as the cuts are “balanced” by eliminating tax preferences because there’s “big money there” for debt reduction.

“We want to see movement” by Republicans “in terms of their sacred cows -- tax giveaways for special interests” and “excessive deductions for the wealthiest people in our country,” she said at the Capitol.

Republicans would be willing to close tax loopholes, though not to replace spending cuts, Boehner’s office said. Instead, Boehner and Senate Republican leader Mitch McConnell said any new tax revenue should be used to lower tax rates.

“I will not be part of any back-room deal and I will absolutely not agree to increase taxes,” McConnell said in a statement.

Democrat Harry Reid of Nevada, the Senate majority leader, joined Pelosi, Boehner and McConnell at the meeting with Obama.

Cutting Budgets

Obama is scheduled to order federal departments and agencies today to begin cutting their budgets. The administration has warned that the across-the-board cuts, split between defense and domestic programs, threaten to eventually send poor children home from pre-school, prolong airport security wait times, reduce unemployment benefits and furlough defense workers.

“Not everyone will feel the pain of these cuts right away,” Obama said. “I don’t anticipate a huge financial crisis, but people are going to be hurt.”

While private and government economists have said the cuts may trim growth if they stay in place, investors have signaled they aren’t concerned about the impact on the $15.8 trillion U.S. economy.

The Standard & Poor’s 500 Index has risen 6.4 percent this year and the dollar led gains in world markets last month.

The S&P index rose 0.3 percent after dropping as much as 0.9 percent earlier as consumer confidence increased and manufacturing grew at the fastest pace since June 2011. The Dollar Index, which tracks the currency against six U.S. trading partners, climbed 0.5 percent today.

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