Soros says U.S. spending cuts to brake economy

Speaking at a think-tank breakfast in Paris, Soros said the budget standoff between President Barack Obama's Democratic administration and the Republican-controlled House of Representatives would force severe cuts in public services.

While currently the U.S. economy is improving, that is going to be a serious brake on that in terms of employment and effective demand, he said.

So I am a little bit less optimistic for the U.S. economy than most people are currently.

Republicans have so far refused to consider tax increases as part of any deficit-cutting effort.

Lawmakers crafted another stopgap spending bill in the U.S. House of Representatives on Tuesday to keep the government running while the Senate set votes for Wednesday on two longer-term measures that appeared doomed to failure.

Soros, who created the giant Quantum hedge fund but describes himself as retired, said the Republican strategy has a good chance of succeeding because the policy is very popular. But it is not really feasible to reduce spending to the extent necessary to balance the budget.

(Reporting by Paul Taylor; Editing by Ruth Pitchford)