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Courting confrontation and compromise alike, House Republicans shrugged off President Barack Obama’s threat to veto legislation to cut federal spending by trillions of dollars on Monday while simultaneously negotiating with him over more modest steps to avert a potential government default.

The Republican bill demands deep spending reductions and congressional approval of a balanced budget amendment to the Constitution in exchange for raising the nation’s debt limit. But Obama will veto it if it reaches his desk, the White House said, asserting the legislation would “lead to severe cuts in Medicare and Social Security” and impose unrealistic limits on education spending.

In response, GOP lawmakers said they would go ahead with plans to pass the bill on Tuesday. “It’s disappointing the White House would reject this commonsense plan to rein in the debt and deficits that are hurting job creation in America,” Speaker John Boehner, R-Ohio said.

By contrast, neither the administration nor congressional officials provided substantive details on an unannounced meeting that Obama held Sunday with the two top House Republican leaders, Boehner and Majority Leader Eric Cantor of Virginia.

Obama said late Monday the two sides were “making progress.”

Several Republicans said privately the decision to vote on veto-threatened legislation is paradoxically designed to clear the way for a compromise. They said conservatives would have a chance to push their deep spending cuts through the House, and then see the measure quickly die either in the Democratic-controlled Senate or by veto.

Barring action by Congress to raise the $14.3 trillion debt limit, the Treasury will be unable to pay all the government’s bills that come due beginning on Aug. 3, two weeks from Wednesday. Administration officials, Federal Reserve Chairman Ben Bernanke and others say the result could be a default that inflicts serious harm on the economy, which is still struggling to recover from the worst recession in decades.

In a gesture underscoring the significance of the issue, Majority Leader Harry Reid, D-Nev., announced the Senate will meet each day until it is resolved, including on weekends.

The two-pronged approach pursued by the House GOP follows the collapse of a weeks-long effort to negotiate a sweeping bipartisan plan to cut into future deficits. The endeavor foundered when Obama demanded that tax increases on the wealthy and selected corporations be included alongside cuts in benefit programs, and Republicans refused.

The failure of that effort also reflects the outsized influence exerted by 87 first-term Republicans, many of them elected last fall with tea party backing.

As late as last Thursday, Republican leaders held a news conference to tout plans to vote this week on a proposed balanced budget amendment to the Constitution.

But the same senior Republicans emerged from a closed-door meeting of the rank and file on Friday to say the House would instead vote on an alternative _ dubbed by its advocates as “Cut, Cap and Balance.” No date has been set for a vote on the constitutional amendment itself.

Officials said the change in course had been requested by members of the Republican Study Committee, whose members are among the most conservative in Congress.

Supporters of the measure say it would cut $111 billion from government spending in the budget year that begins on Oct 1, and $6 trillion more over the coming decade through a requirement that the budget shrink relative to the overall size of the economy.

Additionally, it would require both houses of Congress to approve a balanced budget amendment to the Constitution as a condition for an increase in the debt limit.

Both Boehner and Cantor reacted relatively mildly to the White House veto threat.

“As President Obama has not put forth a plan that can garner 218 votes in the House, I’d caution him against so hastily dismissing `Cut, Cap and Balance,’” said Cantor.

Other Republicans, by contrast, took a harder line.

“I find it incredibly ironic that President Obama is one of the few Americans who think we don’t need a constitutional amendment `to do our jobs.’” Said Rep. Jeb Hensarling of Texas, a member of the leadership.

“The point of cutting up the credit cards in order to raise the debt ceiling isn’t to meet his tax-and-spend demands; it’s to force him to stop spending money we don’t have.”

Senate Republican leader Mitch McConnell of Kentucky made a strong statement of support for the measure.

“Not only is this legislation just the kind of thing Washington needs right now, it may be the only option we have if you want to see the debt limit raised at all,” he said.

“I strongly urge my Democratic friends to join us in supporting it.”

Despite his warning, McConnell and Reid have been deeply involved in writing a fallback measure that is viewed in both houses as promising.

It would allow the president to raise the debt limit by $2.4 trillion in three installments over the next year without a prior vote by lawmakers. Instead, a panel of House and Senate members would be created to recommend cuts in benefit programs, with their work guaranteed a yes-or-no vote in the House or Senate.

Recreating the divide that plagued the earlier negotiations, Democrats want the panel to have the power to recommend higher taxes.

Neither Reid nor McConnell has publicly disclosed the details of the measure, and neither is expected to do so as long as the legislation in the House is pending.

One conservative deficit hawk, Sen. Tom Coburn, unveiled his own proposal to bring federal deficits under control. The Oklahoma Republican recommended $9 trillion in cuts over a decade, including $1 trillion in higher taxes.

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Associated Press writers Andrew Taylor, Erica Werner and Ben Feller contributed to this report.

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It may be bad news for the people in your corporate IT department, but much of their work may be moving to “the cloud.”

If the digital soothsayers are right, that personal computer in your office cubicle someday may function as nothing but a dumb screen. The real electronic brain

New sicknesses are still being reported in the European E. coli outbreak that has killed 39, but Germany’s national disease control center said Friday indications are that the crisis is tapering off.

The number of reported infections in Germany, the epicenter of the outbreak, is now up to 3,408, including 798 people who have developed a serious complication that can lead to kidney failure _ about 100 more overall cases than the day before _ the Robert Koch Institute said.

Still, Robert Koch spokeswoman Susanne Glasmacher said all evidence is that the outbreak remains on the decline.

“It sometimes takes days until we get reports about infected persons,” Glasmacher said. “In general we can say that the number of infected persons is continuing to go down.”

Thirty-eight people have died in Germany and one in Sweden in the epidemic, which was traced last week to sprouts from a farm in northern Germany payday loan.

According to the World Health Organization more than 100 people have been infected in 13 other European countries, Canada and the U.S.

Germany’s health minister has warned that although the outbreak is abating, more deaths are possible.

On Friday, health officials in the Netherlands said a strain of E. coli found on Dutch beet sprouts last week has not been seen before in the country and that researchers sent samples for further analysis to labs in Italy and Denmark.

Nobody appears to have been sickened by the strain, the Dutch Food Safety Authority said.

Dutch Health Minister Edith Schippers said the fresh round of tests will likely take weeks.

_____

Mike Corder contributed to this report from The Hague

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Asian stock markets fell in holiday-thinned trade Monday after a slowdown in U.S. hiring added to evidence that the recovery in the world’s biggest economy is weakening.

Oil prices hovered above $100 a barrel while the dollar was down against the euro and the yen. Markets in Hong Kong, South Korea and mainland China were among those closed for holidays.

Japan’s Nikkei 225 was down 0.9 percent to 9,403.06, with shares of Tokyo Electric Power Co., the Japanese utility battling to bring a crippled nuclear power plant under control, plunging 24 percent.

The tumble comes a day after TEPCO acknowledged that 1,500 more tons of radioactive water were being moved into temporary storage at its Fukushima Dai-ichi nuclear power plant in an attempt to prevent a massive spill of contaminated water into the environment.

More than 100,000 tons of radioactive water have pooled beneath the plant in northeastern Japan since it was hobbled by an earthquake and tsunami on March 11.

Meanwhile, gaming giants Sony Corp. and Nintendo Corp. lost ground as they scrambled to recover from attacks by unidentified hackers. Sony dropped 2.2 percent and Nintendo was down 1.1 percent.

Australia’s S&P/ASX 200 index lost 0.8 percent to 4,566.90, with industrial and mining shares broadly lower. BHP Billiton Ltd., the world’s largest mining company, was down 0.6 percent, while Energy Resources of Australia Ltd. lost 1.1 percent.

On Wall Street on Friday, a weak employment report spurred another stock sell-off, two days after the Dow Jones industrial average had its worst drop in nearly a year. The Dow lost 0.8 percent to close at 12,151.26. The Standard & Poor’s 500 index fell 1 percent to 1,300.16. The Nasdaq composite fell 1.5 percent to 2,732.78.

Employers added only 54,000 new workers in May, the fewest in eight months and well below what analysts were expecting, the Labor Department reported. Private companies hired the fewest new workers in nearly a year. The unemployment rate inched up to 9.1 percent from 9 percent.

The Labor Department’s closely watched monthly jobs report reinforced earlier signals that the U.S. economy is slowing. High gas and food prices have cut into consumer spending and the earthquake and tsunami disaster in Japan have hurt U.S. manufacturers by slowing down supplies of industrial parts.

Benchmark oil for July delivery was down 7 cents to $100.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 18 cents to settle at $100.22 on Friday.

In currencies, the euro rose to $1.4640 after hitting a one-month high of $1.4624 late Friday in New York. The dollar slipped to 80.22 yen from 80.26 yen, the lowest level since mid-May.

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Air France-KLM returned to profit in its latest fiscal year as the rebounding global economy lifted traffic and helped offset a euro1 billion rise in its fuel costs, the airline said Thursday.

Europe’s largest airline by passengers says in a statement it made a euro613 million ($872 million) net profit for the 12 months ending March 31, in contrast to the euro1.6 billion net loss a year earlier when the global economic crisis hammered freight and passenger traffic.

Air France-KLM warned that “uncertainties” including the long term impact of Japan’s earthquake, crises in the Middle East and Africa and elevated fuel prices could weigh on its performance this year. The airline forecast an operating profit higher than the euro122 million it made last year.

Air France-KLM had warned in February that it would miss a targeted improvement in its operating profit due to security issues in North Africa as well as weaker-than-expected revenue in the fourth quarter driven by overcapacity by rivals.

The airline’s fourth quarter earnings were hurt by the Japan earthquake as well as the unrest in the Middle East and Africa. Passenger operations lost euro367 million in the quarter, the airline said, while its freight business lost euro9 million.

In March a French judge filed preliminary manslaughter charges against Air France and jet manufacturer Airbus in connection with the June, 2009 crash of Air France Flight 447 from Rio de Janeiro to Paris. The accident killed 228 people and was the worst in Air France’s history. Last month investigators found the jet’s wreckage on the Atlantic floor nearly 4,000 meters down and successfully brought up the jet’s flight data recorders, which investigators are now examining in a bid to finally discover what caused the accident.

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Home improvement retailers are evolving to meet the needs of budget-conscious consumers stuck in homes they can’t sell.

Home Depot Inc. is focusing more on low-priced items and Lowe’s Cos. on improving customer services such as outdoor equipment repair _ changes dictated by the companies’ first-quarter results, which show customers holding onto their cash until it’s the right time to spend.

Home Depot, the largest U.S. home improvement chain, said Tuesday that its revenue edged down 0.2 percent to $16.82 billion for the quarter that ended May 1, missing Wall Street’s $17.06 billion estimate. Lowe’s, which reported quarterly its earnings Monday, saw its revenue drop 2 percent.

Weather is critical to both chains, and the spring selling season _ their second-biggest in revenue after summer _ typically prompts a flurry of seasonal purchases of plants, patio furniture and barbeque grills. But harsh conditions blanketed most of the nation for much of the first quarter, and shoppers stayed indoors.

So Home Depot and Lowe’s, knowing their customers will come in for spring products once the weather improves, are working now on new ways to keep them coming back. Home Depot raised its full-year earnings forecast, but Lowe’s dampened its outlook.

Home Depot executives said during a conference call Tuesday that their chain is beefing up offerings like paint and soft-sided tool storage as maintenance and repair _ instead of major renovations _ remain at the forefront of consumers’ minds.

Homeowners have plenty of cause for caution, with new-home construction down in April and U.S. homebuilders worrying the housing market won’t recover this year. Shoppers all but abandoned big-ticket projects during the recession.

Home Depot Chief Financial Officer Carol Tome said in an interview with The Associated Press that her company is offering a variety of cost-conscious options, such as cabinet re-facing, for customers who still want to upgrade their kitchens. This price-conscious approach helped contribute to a 1.5 percent increase in the dollar amount of the average transaction at Home Depot for the quarter. At Lowe’s, the average receipt was nearly flat.

Lowe’s Chairman and CEO Robert Niblock also said during a Monday conference call that rising gas prices are pushing consumers to shop at whichever store is the most convenient.

Based on store count, that would put shoppers in Home Depot more often. Lowe’s had 1,751 stores in the U.S., Canada and Mexico as of April 29, dwarfed by Home Depot’s 2,245 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China.

To combat the convenience factor, Niblock says Lowe’s is differentiating its services and products and opening new stores in targeted locations. Lowe’s said Monday that its first-quarter net income fell 6 percent.

Home Depot’s Tome said, however, that it is too early to draw a correlation between gas prices and customer traffic. And her company said Tuesday that its net income rose 12 percent to $812 million, or 50 cents per share, up from $725 million, or 43 cents per share, a year earlier. That beat the 49 cents per share that analysts surveyed by FactSet expected on average.

Mooresville, N.C.-based Lowe’s lowered its full-year outlook to $1.56 to $1.64 per share on a revenue increase of about 4 percent, implying revenue of about $50.79 billion. It previously forecast earnings of $1.60 to $1.72 per share on a 5 percent revenue increase.

Home Depot, based in Atlanta, increased its fiscal 2011 earnings forecast and now expects to earn $2.24 per share, up from $2.20. It kept its revenue forecast at 2.5 percent growth from 2010, when it took in $68 billion, implying revenue for 2011 of $69.7 billion.

Wall Street predicts earnings of $2.30 per share on revenue of $69.72 billion.

Shares of Home Depot gained 27 cents to $37.25 by early afternoon, while Lowe’s stock lost 2 cents $24.82.

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President Barack Obama says one answer to high gasoline prices is to spend money developing renewable energy sources.

“That’s the key to helping families at the pump and reducing our dependence on foreign oil” in the long term, he said Saturday in his weekly radio and Internet address.

Obama raises the issue of rising fuel prices during almost every public appearance and says that he understands the strain higher fuel costs are putting on some family budgets.

He announced Thursday during an event in Reno, Nev., that the Justice Department will begin looking for cases of fraud or manipulation in the oil markets, even though Attorney General Eric Holder suggested a variety of legal reasons may be behind the surging gas prices.

As he has before, Obama said Saturday there is no “silver bullet” that will slash gas prices immediately. But he said there are things government can do to help make a difference in the long term. They also include boosting U.S. oil production, rooting out any illegal activity by traders and speculators and ending $4 billion in annual taxpayer subsidies to oil and gas companies no faxing payday loans.

“Instead of subsidizing yesterday’s energy sources, we need to invest in tomorrow’s,” Obama said.

In the weekly Republican address, Nebraska Sen. Mike Johanns focused on jobs and said lawmakers who are serious about creating them need to cut spending and the bureaucracy that he and others say burden small businesses and keep them from hiring more.

“If everyone is serious about job creation, in addition to reducing the debt, let’s reduce burdensome regulations that serve no purpose other than to insert more government into the lives of citizens,” he said. “We can’t tie up small businesses in needless red tape and regulations and expect them to create jobs and boost the economy.”

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The world’s strongest economies will find themselves in a new crisis if they fail to address the dangerous imbalances in the world economy, France’s finance minister warned Friday.

But Christine Lagarde also recognized that governments have sought starkly divergent paths out of the financial crisis and their “vested interests” could endanger agreement. She spoke as finance ministers and central bank governors of the Group of 20 industrialized and fastest developing nations gathered for their first meeting this year in Paris.

The status quo of some countries building up huge surpluses while others run steep deficits “leads us straight into the wall of another debt crisis,” Lagarde said at a financial conference that kicks off the G-20 meeting.

The world’s top financial officials hope to draw up a list of indicators that best measure dangerous imbalances in trade deficits, surpluses, budget deficits or levels of debt. Inflation and national savings rates are also likely to be considered as part of the range of possible yardsticks.

“We will focus on how to use those indicators to achieve better collaboration and cooperation,” Lagarde said, adding that the G-20 meeting hosted by France would be about “more stability, less volatility, less excesses, and world governance.”

Lagarde has the difficult task of picking up the pieces of last November’s G-20 summit of heads of state in Seoul, which ended without any meaningful agreement on how to defuse long-standing tensions over trade and currency imbalances.

Her warning of the danger of imbalances was echoed by U.S. Federal Reserve Chairman Ben Bernanke. In the years before the financial meltdown of 2008, countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value, Bernanke said in his speech at the conference.

The Fed chairman called on surplus countries like China to let their exchange rates float freely, and urged nations like the United States needed to narrow their budget shortfalls and save more.

“If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world,” Bernanke said.

Emerging markets like China and Brazil have emerged from the financial crisis much stronger than some of the more traditional powers such as the U.S, Europe and Japan.

While there is widespread agreement among financial policymakers that smoothing out imbalances is key to getting the global economy back in track, how that should be done is more divisive.

The mere existence of the imbalances points to vastly different growth models among the world’s biggest economies, with each arguing that changing its strategy _ whether based on exports, exchange rate controls, or the free flow of money _ would hurt its recovery.

Officials will not even get to the more difficult question of setting thresholds for these indicators. The even more tricky question of how to enforce any thresholds that leaders eventually sign up to is yet further off the agenda.

“Name and shame” policies like those used in the fight against international tax havens would be one, albeit toothless, possibility.

Lagarde said reducing imbalances will “require cooperation, understanding of each other’s positions and vested interests.” She said the talks on Friday and Saturday should help G-20 members “move from understanding to cooperating and collaborating.” Finance ministers will meet several more times this year before France’s G-20 presidency culminates with a heads of state summit in Cannes in November.

“It’s going to be quite a task, but that’s where we need to go,” Lagarde said

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President Hugo Chavez said Sunday that he has no intention of ceasing his efforts to make Venezuela a socialist country, and he expressed confidence that his allies would take the reins of his “Bolivarian Revolution” if he died or decided to step down.

“There’s no end here, this is going to continue,” said Chavez, referring to the political movement he named after 19th-century independence hero Simon Bolivar.

Chavez, a former paratroop commander who was first elected in 1998, said his close confidants would undoubtedly assume power and continue his efforts to steer Venezuela toward socialism if he were to die or retire from politics.

“I don’t fear death,” Chavez said during an interview broadcast on the local Televen television channel, adding that he believed a younger generation of revolutionary-minded allies would persevere in Venezuela’s ongoing political tug-of-war.

Critics ranging from opposition leaders to representatives of the Roman Catholic Church claim Chavez has become increasingly authoritarian and poses a threat to the South American country’s democracy by aspiring to cling to power for decades to come unsecured personal loans.

Chavez vowed on Sunday to win Venezuela’s next presidential election in 2012.

“If they don’t kill me or if some kind of catastrophe does not occur, I’m sure _ there will be much work to be done _ that I’ll be re-elected for six more years,” he said.

Opposition lawmaker Alfredo Ramos said that a coalition of opposition parties has decided to choose a contender for next year’s vote through a primary, which will be held at the end of this year or in early 2012.

“I don’t have the slightest doubt that Hugo Chavez will be defeated in 2012 because the people, not the political parties, are going to pick a candidate,” Ramos said in a telephone interview. “Chavez doesn’t have a chance of winning.”

Chavez remains Venezuela’s most popular politician despite his administration’s failure to resolve pressing problems: a severe shortage of housing for the poor, widespread violent crime, economic stagnation, and Latin America’s highest inflation rate.

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Bank of England policy maker Martin Weale said Britain needs an increase in interest rates now to prevent higher prices becoming entrenched in the economy.

“The longer inflation stays above the target and the further it rises, the greater the risk that inflationary expectations will become built in,” Weale wrote in an article the Guardian published today. “These arguments make a powerful case for a modest rise in the bank rate” as “the costs of a small rise now would be lower than the eventual price of addressing higher ingrained inflation.”

Weale this month joined Andrew Sentance in voting for a quarter-point rate increase, after inflation accelerated to 3.7 percent in December, compared with the bank’s 2 percent target. The central bank’s Monetary Policy Committee also has to take into account signs the economic recovery is fading, after initial estimate from the statistics office showed the economy shrank 0.5 percent in the fourth quarter.

Recent gross-domestic-product figures show that the economy is “appreciably weaker than expected,” Weale said. The 0.5 percent contraction compared with economists forecast for 0.5 percent growth.

Inflation Pressures

Most of the recent increase in inflation has been due to the weakness of the pound, higher energy prices and an increase in the U.K.’s sales tax, Weale said. Still, there is a risk that some “one-off” pressures will persist, and that “continuing rapid economic development in China and elsewhere will lead to persistent upward pressure on commodity prices,” he said electronic check payday advance.

The pound was little changed against the dollar today and was trading at $1.5857 as of 9:06 a.m. in London. It weakened 0.1 percent against the euro to 85.92 pence.

While Weale and Sentance voted to increase the benchmark rate at the Jan. 13 meeting, Adam Posen kept up his call for more stimulus to aid growth. The remaining six members of the panel, including Governor Mervyn King, voted to leave the rate on hold and keep its bond-purchase program at 200 billion pounds. ($317 billion).

Britons’ expectations for inflation for the next year rose in January to their highest level since 2008, Citigroup Inc. said on Jan. 28. The median prediction for price increases in the coming 12 months climbed to 3.6 percent from 3.5 percent in December, it said, citing a survey by YouGov Plc.

“If growth resumes shortly, my concerns about inflationary expectations would remain,” he wrote. “But were the recent weakness to mark the start of a sustained new downturn, inflationary pressures would be likely to fade without a bank rate increase.”

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