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Obama warns cuts 'eventually' to cause pain

WASHINGTON, March 5 (BSS/AFP) - US President Barack Obama warned yesterday that $85 billion in budget cuts that hit last week would "eventually" cause deep pain, toning down dire forecasts of the impact of the austerity drive.

As he nominated Walmart Foundation head Sylvia Mathews Burwell as his new budget chief, Obama again made a pitch for a compromise with Republicans that includes hikes in revenues from closing tax loopholes as well as budget cuts.

"Eventually a lot of people are going to feel some pain, that is why we have got to keep on working to reduce our deficit in a balanced way -- an approach that is supported by a majority of the American people."

Obama said the automatic, arbitrary budget cuts known as the sequester that hit the economy on Friday after he and Republicans failed to reach a deal on how to cut the deficit, were already costing jobs.

In the weeks leading up to the cuts, the White House had issued warnings of severe damage to the American economy, saying hundreds of thousands of people could lose jobs and economic growth could be hit.

Now that they have gone into force, the White House appears to be playing a longer game, as it tries to leverage anger at tightening budgets to pressure Republicans to relent on their refusal to raise revenues.

Top Obama administration economic official Gene Sperling said on television politics shows on Sunday that the White House believed that when the pain gradually rises over the sequester, Republicans will compromise.

The measures could mean long lines at US border posts, reduced military readiness, cuts to special needs education programs, and the curtailment of some emergency medical services, according to White House officials.

The cuts were never meant to take effect but rather were a poisoned pill clause attached to the 2011 agreement to raise the debt ceiling, and designed to be so scary that lawmakers would find a less drastic way to cut the deficit.

But such is the dysfunction in Washington and antipathy between Obama and Republicans that no deal was done and the cuts came into force.