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Obama: Government Will Manage Sequester 'the Best We Can'

President Obama presides over the first Cabinet of his second term Monday.
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President Obama presides over the first Cabinet of his second term Monday.

President Barack Obama said Monday that agencies will need to make "very difficult decisions" as a result of sharp spending cuts that went into effect last week and warned that families will be hurt and economic growth will suffer.

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 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.

On Capitol Hill, Republicans controlling the House moved to give the Pentagon more money for military readiness. They also sought to largely exempt agencies like the FBI and the Border Patrol as well as Western firefighting efforts from the effects of across-the-board spending cuts that are just starting to take effect.

The effort comes as top Republicans unveiled a huge spending measure to fund the government through September.

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. (Read More: Obama Offers to Cut Social Safety Net)

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 population hits retirement age.

The Republicans' broad measure unveiled Monday would leave in place cuts of 5 percent to domestic agencies and 7.8 percent to the Pentagon ordered by Obama on Friday night after months of battling with Republicans over the budget.

But the measure would award the Defense and Veterans Affairs departments their detailed 2013 budgets while other agencies would be frozen at 2012 levels—and then bear the across-the-board cuts.

The Associated Press contributed to this story.

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